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FHA mandates review of nonpurchasing spouse's credit?


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I just read a thread on an FHA website, under credit guidelines that state:

NON-PURCHASING SPOUSE: If a married borrower is purchasing a property by himself/herself, the credit obligations of the spouse must be included with the application and will be factored in with the borrower's credit obligations and used to determine the financial capacity of the borrower only if the borrower lives in a community property state. Furthermore, the non-purchasing spouse may be required to sign a security instrument or documentation relinquishing all rights to the property.

Is this true? I thought if your spouse's credit is worse than yours and your salary is adequate enough to qualify on a loan you don't have to include the spouse's credit history.

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This is a government agency that you're dealing with here...

Anything they say goes... (He who has the gold -makes the rules.)

As a rule FHA is detailed oriented to the Nth degree.

This is more a case of them trolling for Defaulted government obligations or protecting themselves if your spouse plans to declare bankruptcy right after you purchase the home.

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As a seller, FHA is a nightmare. They mandate some pretty tight restrictions on their inspections. In a seller's market, which is what we had in most areas in the past few years, most seller's (that I know) wouldn't touch you as a buyer due to the hassle. As the market cools, of course, FHA buyers have much more leverage. And I indeed think it is cooling off. Two folks I know bought homes in the Philly area in the past two weeks. One was 26K under asking price and the other was 16K under. That was unheard of even 6 months ago in this area.

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  • 2 weeks later...
As DocDon said, this is only in community property states. And they don't use your spouses credit score (unless they are on the loan, of course). They just have to include your spouses monthly debts when calculating your debt-to-income ratio for qualification.

Don't forget, If your spouse is not on the lender will not allow him or her to be on the title (The Deed,) to the home, ( in most jurisdictions.)

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As DocDon said, this is only in community property states. And they don't use your spouses credit score (unless they are on the loan, of course). They just have to include your spouses monthly debts when calculating your debt-to-income ratio for qualification.

Don't forget, If your spouse is not on the lender will not allow him or her to be on the title (The Deed,) to the home, ( in most jurisdictions.)

True for FHA, except in community property states, where it's mandatory for both spouses to be on the title. Conventional loans generally do allow the non-purchasing spouse to be on the title in all states.

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True for FHA, except in community property states, where it's mandatory for both spouses to be on the title. Conventional loans generally do allow the non-purchasing spouse to be on the title in all states.

That is why the spouse's credit and obligations are included in the mortgage application.

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