FHA Loans for Unmarried Couples: A Complete Guide for 2023

Buying a home is an exciting milestone, but financing can be tricky when you’re an unmarried couple. Fortunately, FHA loans provide a great option FHA requirements are more flexible than conventional loans, making it easier for unmarried couples to qualify In this comprehensive guide, we’ll walk through everything you need to know about getting an FHA loan as an unmarried couple in 2023.

Overview of FHA Loan Benefits

FHA loans are government-insured mortgages backed by the Federal Housing Administration. Here are some key advantages:

• Low down payments – FHA requires just 35% down on qualifying loans This makes it feasible for couples without a lot of savings,

• Flexible credit requirements – FHA has more lenient credit standards than conventional loans Minimum 580 FICO score required.

• Low mortgage insurance – FHA loans feature low upfront and annual mortgage insurance premiums.

• Gift funds allowed – The down payment can come from gifted funds from family or others.

• No joint credit history required – Each applicant is reviewed individually, no need to show jointly established credit accounts.

These features make FHA loans a great fit for many unmarried first-time home buyers.

FHA Loan Options for Unmarried Couples

Unmarried couples can apply for these common FHA loan programs:

• FHA 30-year fixed rate – The most popular option, with steady payments over 30 years.

• FHA 15-year fixed rate – Higher monthly payments but you pay the loan off faster.

• FHA 5/1 adjustable rate – Interest rate is fixed for 5 years then adjusts annually. Lower initial payments.

• FHA 203(k) rehab loan – Finance purchase plus renovations into one FHA-insured mortgage.

Be sure to talk over the different loan types with your lender to decide what works for your financial situation.

Unmarried Couple Home Buying Eligibility

To qualify for an FHA loan as unmarried co-applicants, here are key requirements to meet:

• Both co-applicants occupy home – You must live in the home as primary residence.

• Minimum 580 FICO credit scores – Each applicant needs a 580+ credit score. One can offset the other.

• Stable income history – Should show at least 2 years consistent employment for both applicants.

• Debt-to-income under 55% – Your combined monthly debt divided by gross monthly income.

• Sufficient funds for down payment – Remember the 3.5% down payment can be gifted.

Meeting these criteria makes it likely you’ll get approved together for an FHA home loan!

How Unmarried Couples Should Apply

When applying for an FHA loan as an unmarried couple, here are some tips:

• Apply as unmarried joint applicants – You don’t need to show any legal domestic partnership.

• Discuss how you’ll hold title – Tenancy in common gives each person equal interest.

• Check community property laws – These laws may impact how assets/debts are counted.

• Document gift funds if needed – Lender will verify any down payment gifts received.

• Opt for co-signing if one applicant is stronger – The co-signer then takes on equal liability.

• List both applicants on the sales contract – Include all buyers when making an offer.

Being upfront about your unmarried status simplifies the application process.

Counting Assets and Debts

FHA will count assets and debts a few different ways for unmarried joint applicants:

• Separate accounts – Only the individual account owner’s assets/debts are counted.

• Joint accounts – The full amounts are counted for both applicants.

• Community property states – Assets and debts may be split 50/50 despite who’s name is listed.

Talk to your loan officer to understand how your particular assets and debts will be handled based on your relationship status and state laws.

Options to Strengthen Your Application

If your unmarried application needs a boost, here are options to consider:

• Add a co-signer – A third party co-signs and takes on equal loan liability.

• Increase down payment – Going above 3.5% down improves your debt-to-income ratio.

• Pay down debts – Reducing credit card balances for example can help your case.

• Explain past credit issues – Document any past late payments or collections.

• Improve credit score – Take steps like paying down balances before applying.

Look at the entire picture to identify areas you can strengthen to get approved together.

What Happens if You Separate?

Hopefully it doesn’t come to this, but if an unmarried couple splits up after buying a home together, here’s how FHA loans handle it:

• You’re both still fully responsible for repaying the mortgage.

• You’ll need to work out shared ownership and title transfers.

• Refinancing into one person’s name alone is an option.

• Selling the home and splitting proceeds may make sense.

• Legal advice can help protect each person’s rights.

No one anticipates a breakup, but keep this in mind when buying as unmarried co-borrowers.

Tips for a Smooth Unmarried Couple Home Purchase

Follow these tips for the best experience getting an FHA loan and buying a home as an unmarried couple:

• Review all documents and disclosures together before signing

• Be present together for home inspections and appraisal

• Split responsibilities like getting quotes from contractors for repairs

• Make all loan decisions and changes jointly

• Maintain open communication with your loan officer throughout

• Celebrate together when you finally close and get the keys!

With teamwork and a trusted lender, you’ll be in your new home together in no time.

The Bottom Line

The bottom line is that FHA loans provide a great financing solution for unmarried couples to buy their first home together. FHA requirements are achievable for most responsible applicants. Just make sure you consider the advice above when applying jointly without legal marriage. Shop multiple lenders to find the best FHA loan terms and service. Owning a home is a big step forward in any committed relationship, whether married or not. With an FHA insured mortgage, you can start building equity as a couple and reach this exciting milestone.