When applying for a mortgage, if you’re married or intend to get married and are considering purchasing a home, you typically combine your income and credit scores. However, you might be wondering if it’s possible to purchase a home with just one partner’s name on the mortgage.
The short answer is yes. A married couple can apply for a mortgage under only one name. We have answers if you’re thinking about getting a mortgage without your spouse or if you’re curious as to why a couple would take this route.
Absolutely! In the United States a married couple can buy a house with only one partner’s name on the mortgage and title. This option might be appealing for various reasons, such as improving loan eligibility or simplifying estate planning. However, it’s crucial to understand the implications and potential challenges before taking this step.
Why Consider Buying a House Under One Name?
Several factors might motivate a couple to pursue this approach:
- Credit Score Discrepancies: If one partner has a significantly lower credit score, including them in the mortgage application could negatively impact the interest rate and loan terms. Leaving them off might secure a better deal.
- Debt Management: If one partner carries substantial debt, their inclusion could push the debt-to-income ratio (DTI) beyond the lender’s acceptable limit. Excluding them could improve the DTI and increase loan eligibility.
- Income Verification Challenges: If one partner is self-employed or lacks the required documentation for income verification, leaving them off the mortgage could streamline the process.
- Estate Planning Strategies: If one partner wants to leave the property to someone other than their spouse, such as children from a previous marriage, excluding them from the title could simplify the estate planning process, especially in community property states.
Community Property States: A Special Consideration
It is important to remember that community property laws are in effect in nine US states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Regardless of whose name appears on the title or mortgage, all assets and debts acquired during a marriage are deemed jointly owned by both spouses in these states. This implies that the other partner still has legal rights and obligations with regard to the property even if only one partner’s name appears on the documents.
Potential Challenges and Considerations
While it may seem advantageous in some circumstances to purchase a home under one name, there are potential drawbacks to take into account:
- Limited Loan Amount: Excluding one partner’s income from the mortgage application could restrict the maximum loan amount you qualify for, potentially limiting your housing options.
- Debt Impact: Even if only one partner’s name is on the mortgage, their debts might still be considered in community property states, potentially affecting loan eligibility.
- Estate Planning Complexity: While excluding a spouse from the title might simplify estate planning in some cases, it could create complications in others. Consulting with an estate planning attorney is highly recommended.
- Financial Implications: If the couple divorces, the partner whose name is not on the title might have limited rights to the property, depending on the state’s laws and prenuptial agreements, if any.
Making an Informed Decision
Ultimately, the decision of whether to buy a house under one name should be made after careful consideration of your individual circumstances, financial goals, and potential challenges. Consulting with a financial advisor, mortgage lender, and estate planning attorney can provide valuable insights and guidance.
Additional Resources:
- Orchard Blog: Buying a House Under One Name: Should Married Couples Do It?
- Quicken Loans: Married And Buying A House Under One Name
- Rocket Mortgage: Can a Married Couple Buy a House Under One Name?
Frequently Asked Questions:
- Can I add my spouse to the title later?
Yes, you can add your spouse’s name to the title later using a quitclaim deed. However, consult with a legal professional to understand the implications in your specific situation. - Can I use a joint bank account for the mortgage if my spouse isn’t on the loan?
Yes, using a joint bank account for mortgage payments is acceptable as long as both partners have access to the funds and your name is on the account. - Can I be on the mortgage and add my spouse to the title?
Yes, you can have both your names on the title even if only one of you is on the mortgage. However, remember that the person on the mortgage is solely responsible for the loan payments.
Remember: Purchasing a house is a significant financial decision. Consider the benefits and drawbacks of purchasing under one brand carefully, and get expert advice to make the best decision possible for your particular situation.
Can I add my spouseâs name to the title at a later time?
You can use a quitclaim deed to add your spouseâs name later. A quitclaim deed is a type of deed that transfers property between parties. It is commonly used to add a spouse to a title, remove a spouse following a divorce, or transfer ownership to family members.
One Spouse Is Carrying A Lot Of Debt
A lender will consider your debt-to-income ratio (DTI), or the portion of your gross monthly income that is allocated to your fixed monthly debt, in order to assess your eligibility for a mortgage. DTI can have a huge impact on a home loan. To lower the DTI, you might decide to exclude one spouse from the mortgage if they have a lot of debt.