We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less
If you want to borrow a large amount of cash but need to prove additional household income, your spouse may be able to help. You cannot simply list a spouse’s income with, or instead of, your own if you apply in your name alone. However, you can list their income if your spouse agrees to become a “co-borrower” on the loan.
It’s possible to use your spouse’s income on a loan application, but only under strict circumstances. We’ll review the steps you should take to help you get approved.
Getting approved for a personal loan often requires meeting income requirements, But what happens when your income alone doesn’t cut it? Can you use your household income instead?
The short answer is yes, you can use your household income when applying for a personal loan provided you meet certain requirements. Let’s take a closer look at how it works.
What Is Household Income?
Household income refers to the combined incomes of everyone living in a single home. This includes:
- Your income
- Your spouse or partner’s income
- Income from other family members or roommates
For example, if you earn $50,000 per year, your spouse earns $40,000, and you have an adult child who earns $30,000, your total household income is $120,000.
Lenders may allow you to use household income to qualify for a larger loan amount or better interest rate. This can be useful if your income alone is too low to get approved or you want to borrow more.
Can I Use Household Income When Applying?
You typically can’t just list your household income on a personal loan application if you’re the only borrower. Here are two ways lenders allow using household income:
1. Apply With a Co-Borrower
The most straightforward way is to apply for a joint personal loan with your spouse, partner, or another household member as a co-borrower.
When you apply together, the lender will consider both incomes and credit scores to determine eligibility. This greatly improves chances of approval if the co-borrower has a higher income or better credit.
For example, let’s say your income is $50,000 and credit score is 650. Your spouse earns $70,000 per year with a credit score of 750. Applying together could qualify you for a larger loan amount at a lower rate versus applying alone.
Both co-borrowers are equally responsible for repaying the loan. Defaulting would damage both credit scores.
2. Provide Proof of Household Income
Some lenders may allow you to provide proof of household income when applying alone. For example, showing your spouse’s pay stubs or tax returns.
This demonstrates you have access to the additional income, even though the co-borrower isn’t on the loan. Lenders may request permission from the income earner before considering it.
The lender will typically still base eligibility mainly on your individual income, credit, and debt-to-income ratio. But household income can provide an extra layer of assurance you can afford the payments.
Just keep in mind, without a co-signer, the additional household income doesn’t make you legally responsible for repayment. Defaulting would only hurt your credit.
What Income Sources Count Towards Household Income?
Lenders want to see stable and verifiable income when considering household earnings. Here are some sources that commonly count:
- Employment income – Wages, salaries, bonuses, commissions, tips
- Self-employment income
- Social Security/disability benefits
- Retirement income – Pensions, 401(k)/IRA withdrawals
- Investment income – Dividends, interest, rental property income
- Child support or alimony
- Financial aid (that goes directly to the borrower)
Income from other household members would need to meet these same standards. Unverifiable or inconsistent income may not be included.
For example, your spouse’s wages would count, but not the occasional cash your roommate makes from gig work.
What Do Lenders Look For To Use Household Income?
Lenders will want to verify all income used to qualify for a personal loan. Here are some requirements they commonly look for:
-
Proof of Income – Recent pay stubs, tax returns, bank statements showing deposit amounts, etc.
-
Access to the Income – Joint bank accounts, comingling of finances. May request permission from the income earner.
-
Minimum Credit Requirements – Each applicant still needs a minimum credit score, often at least 620-650.
-
Low Debt-to-Income Ratio – Your total monthly debt payments, including the new loan, should not exceed 40-50% of household income.
Meeting these requirements demonstrates you can comfortably afford the loan payments even without the co-borrower.
If you don’t meet the credit or income requirements, adding a co-borrower is usually better than trying to use household income alone.
How To Apply Using Household Income
Here are some tips for using household income when applying for a personal loan:
-
Shop lenders – Each has different co-borrower and income policies. Compare options.
-
Check if co-borrower is required – See if you can provide household income documentation without one.
-
Gather income verification – Tax returns, pay stubs, bank statements, etc.
-
Review lender credit requirements – Know the minimum credit scores needed.
-
Calculate debt-to-income ratio – Add up monthly debts and divide by household income.
-
Consider having co-borrower apply – Even if not required, may help loan terms.
-
Read loan agreement carefully – Understand repayment responsibilities.
Taking these steps can help ensure you submit a complete application and get approved for the best possible loan terms.
Pros and Cons of Using Household Income
There are some important pros and cons to weigh when considering using household income for a personal loan:
Pros
- Increase approval chances
- Qualify for larger loan amount
- Lower interest rate
- Manageable payments
- Build credit history
Cons
- Must meet lender requirements
- Co-borrower also responsible
- Default damages all credit scores
- Higher debt-to-income ratio
- Reduced borrowing capacity for co-borrower
For many borrowers, the potential benefits outweigh the drawbacks. But carefully consider how taking on joint debt could impact your financial situation.
Alternatives If You Can’t Use Household Income
What if you need to borrow money but don’t have a co-borrower and your income alone won’t qualify? Here are a few options to consider:
-
Apply with a cosigner – Similar to co-borrower but they don’t share loan proceeds.
-
Take out a secured loan – Backed by collateral like a savings account.
-
Borrow from retirement plan – 401(k) or IRA loans if available.
-
Debt management program – Can help negotiate lower monthly payments.
-
Credit counseling agency – May provide loans or assist with consolidating debt.
-
Peer-to-peer lending – Borrow from an individual rather than a bank.
-
Paycheck advance – Some employers provide access to earned wages.
While not ideal alternatives for everyone, they may be helpful temporary solutions for getting access to cash when you don’t qualify for an affordable personal loan on your own.
The Bottom Line
Using household income instead of your individual income when applying for a personal loan can definitely improve your chances of getting approved and receiving better loan terms.
Just be sure to fully understand the lender’s requirements, particularly if a co-borrower is not involved. Weigh the pros and cons carefully before moving forward, and have a backup plan if you still don’t qualify.
With the right preparation, being able to leverage your combined household earnings can make getting a personal loan more feasible.
What Is a Personal Loan?
A personal loan is a type of installment loan that is paid back with interest in equal monthly payments over a term of up to seven years. Personal loan interest rates tend to be lower than for credit cards, making them a popular option for consumers who need to borrow a large amount. Common uses for personal loans include major home or car repairs, medical bills, and debt consolidation.
There are different types of personal loans. Unsecured personal loans are the most common. These are not backed by collateral, such as your car or home.
Before you decide whether to include your spouse’s income, gather this information to assess your own financial standing.
Lenders will look at your full credit history to evaluate your creditworthiness, so it’s smart to review your credit report before applying for a loan. You can request a free credit report from each of the three major credit bureaus — Equifax, Experian, and TransUnion — once a year through AnnualCreditReport.com.
When you receive your report, review it closely and make a note of any incorrect information. If you see any mistakes or outdated information (more than seven years old), you can file a dispute with the credit bureau(s) reporting the error.
If you have a limited or no credit history, consider taking some time to improve your credit before applying for a loan.
Next, take a look at your credit score. You can find your credit score for free from Experian, or you can ask your bank or credit card company. The minimum credit score requirement for a personal loan varies from lender to lender. Broadly speaking, many lenders consider a score of 670 or above to indicate solid creditworthiness.
While there are personal loan products on the market designed for applicants with bad credit, they typically come with higher interest rates. If you are less than thrilled with your credit score, you can take steps to improve it.
Your debt-to-income ratio (DTI) is the amount of debt you have in relation to your income, expressed as a percentage. Ideally, your DTI should be no more than 36%. Lenders prefer that no more than 28% of your debt be housing related (rent or mortgage). If your DTI is too high, you have two options: pay down your debt, or increase your income.
Shop around with online lenders to compare the interest rates and monthly payments you’re offered with your income alone. When you’re comparing lenders, keep an eye out for any hidden fees, such as origination fees, prepayment penalties, and late fees. A personal loan calculator shows exactly how much interest you can save by paying off your existing loan or credit card with a new personal loan.
Now that you have a firm grasp of your financial standing, you can assess whether you need to include your partner’s income as part of your application.
Awarded Best Online Personal Loan by NerdWallet. Apply Online, Same Day Funding
You cannot simply list your partner’s income along with, or instead of, your own when applying for a personal loan in your own name. However, if your spouse agrees to become a co-borrower on the loan, both your incomes and credit histories will be considered. This can increase your chances of getting approved, qualify you for a larger loan, or give you access to lower interest rates and loan terms. The catch is that both parties have equal responsibility for paying back the loan, and any late or missed payments can negatively affect both your credit scores.
If you’ve explored your options and decided that a personal loan is right for you, it’s wise to shop around to find the right loan. Consider personal loans from SoFi, which offers loans of up to $100,000 with no fees required. Borrowers may receive funding as quickly as the same day it is approved.
Can I Use My Spouse’s Income On The Loan So I Get Approved? (First Time Home Buyer Tips and 2023)
Can I use my spouse’s income to get a personal loan?
You cannot simply use your spouse’s income or your combined household income, even with their permission, when applying for a personal loan in your own name. Now for the good news. If your partner has a strong credit history and income, they can become a secondary “co-borrower” on the loan.
How do I qualify for a personal loan?
There’s no one-size-fits-all approach to qualifying for a personal loan; the criteria will vary among lenders. However, most lenders require a good credit score, a sufficient income, and a low DTI ratio. Good credit score – Each lender has different credit score requirements for loan applicants.
How much income do you need to get a personal loan?
Lenders may also look at your employment history to predict if your income is likely to continue. Beyond this, some lenders may require you to have a minimum household income to qualify for a personal loan. For example, Discover requires its personal loan applicants to have at least $25,000 in household income.
What factors determine eligibility for a personal loan?
Lenders will look at factors like your credit score, income, debt-to-income (DTI) ratio, and collateral to determine your eligibility for a personal loan. Different lenders will have different requirements for approving personal loans. Some lenders may be willing to work with applicants who have lower credit scores.
What should I know before applying for a personal loan?
Before you apply for a personal loan, you should check your credit score and history, know your income, and understand your debt-to-income ratio. These three elements can be the difference between your loan being approved or denied.
How old do you have to be to get a personal loan?
Most lenders also require you to be at least 18 years old and have a bank account in your name. This allows the lender to verify your income and confirm that you have a way to make loan payments. Having a high enough credit score is another important personal loan requirement.