When utilizing your VA loan benefits to purchase a home, having a spouse on the mortgage can greatly impact the outcome. Lenders may consider the additional income as long as it is consistent, dependable, and expected to continue. However, the lender will also assess the debts of the purchasing spouse. If the spouse carries significant debt, it can negatively affect your debt-to-income ratio, potentially hindering your ability to secure the loan. In such cases, it may be advisable to apply for the loan independently, even if that means obtaining a lower loan amount since your spouse's income cannot be included. Regrettably, veterans residing in nine states cannot disregard their spouse's debt, leading to difficulties when attempting to qualify for a VA loan. In these community property states, the process of purchasing a home can be more complex, and special considerations must be taken into account.
The community property states are:
In these states, married couples who obtain property usually own it jointly, which means it would be divided upon divorce or other dissolution of the marriage. That adds a layer of potential concern for mortgage lenders, who would otherwise only be concerned with whose name is on the loan.
To counter that, lenders can count the debts of a spouse even if he or she isn't going to be on the mortgage. So even if you have great credit and a healthy debt-to-income ratio, lenders will still take a long, hard look at your spouse's financial profile. Whatever debts your spouse has will be counted when the lender calculates your DTI ratio. The VA generally wants borrowers to have a DTI ratio of 41 percent or less.
If your spouse has any derogatory debt like collections or judgments, that will likely be counted in the lender's derogatory debt cap, which limits the amount of bad debt a borrower can have.
This communication is for informational purposes only. This is not a commitment to lend. All loans are subject to buyer and property qualification. All programs, rates, and fees are subject to change or cancelation at any time and without notice. Contact Mortgages by Richard to learn more about mortgage products and your eligibility.
Laura H. & Christopher M.
We were initially denied by a lender and when our possibilities were limited, Mr. Krauss helped us achieve our dream of getting a model home. My husband is a Veteran and he informed us of discounts and grants that we were not aware of.
I was well informed every step of the way never left me guessing all ways their when I had a question all ways very professional and respectful I had a pleasant experience.
Consistent communication and being able to trust the process. Richard closed my purchase after it was denied by another lender due to my low credit.
Richard's quick response to any issue or questions I may have had. And his expertise in getting it all handled quickly. I am Self Employed, he was able to close the loan before the due date.
Richard has successfully completed several refi’s for us which is why we brought our latest refi need to him. Our communication was excellent and our current refi went smoothly.
Richard was able to close my VA Purchase ahead of time with a low credit score of 520. His expertise overcame every hurdle within the process.
Richard took the time to help a homeless disabled Veteran into a new home. No one would help except for him. He explained how to qualify and executed my purchase ahead of schedule with the builder!
I was in an active Chapter 13 Bankruptcy, Richard was able to contact the court for approval and assist with my new purchase. He then provided me with the SAH Grant information for disabled Veterans and helped with my disabilities in the new home.
Richard is my old high school friend. We both served in the military, and he was able to explain how I can purchase with a lower credit score. My family has a beautiful home and we are able to start our next chapter!
Richard executed a Cash Out refi to purchase an investment property. The loan was approved withing 5 Days. Extremely quick turn around and awesome communication. He always answered my questions.