Did you know that even if you’re married, your credit score and your spouse’s credit score are entirely separate? This is true no matter how long you’ve been together and even if you share all of the same accounts and loans.
If you want to use your spouse’s income to qualify for the loan, you’ll also have to use your spouse’s credit, for better or for worse.
Lenders use both partners’ credit scores, but a common myth is that they take the scores and average them, which isn’t the case. Instead, they do this:
Each applicant has three credit scores (one from each major credit bureau), and the lender looks at all of them. Let’s say the first applicant’s scores are 750, 730, and 715. Let’s say that the second applicant’s scores are 650, 630, and 615. The lender goes with the lowest middle score, which is 630 for this application.
Your loan’s interest rate will be based off of that lower credit score, and if you have very different scores, it can have a substantial impact on what kind of home you’re able to afford together.
If your partner has poor credit, you have a few options when you’re applying for a loan.
Using a partner’s income can really increase your chances of getting favorable loan terms and qualifying for the house you want.
The more income you use to qualify for the loan, the greater the dollar amount you’ll qualify for. This is because lenders won’t allow you to allocate too much of your income to your mortgage payment.
Your debt-to-income ratio (commonly called DTI) is the amount of debt you pay every month (including auto loans, credit card debt, personal loans, and your new mortgage) divided by your gross monthly income. This number is the number one way lenders verify that you’ll be able to repay the loan.
For example, if you have $10,000 in income every month but have $3,000 in monthly debt payments, your DTI is 30%.
An ideal DTI is 36% or under, though many lenders and loan programs will allow higher DTI ratios. Conventional programs allow upwards of 50%, government loans like FHA and VA allow 55% and even higher in some situations, but most jumbo loans are limited to 43% maximum.
Remember though, these percentages represent all ALL your debt combined. So the more credit card, auto, installment, student loan, or other debt you have, the smaller your mortgage payment can be, and the less of a loan you’ll be able to qualify for.
If your DTI is higher than the guidelines allow for the loan program you’re interested in, you have a few options:
Buying together can be complicated, and no mortgage scenario is exactly the same. If you’re not sure what’s right for your situation, I hope you’ll give us a call! We’re here to help you figure it out.
“Faye helped me purchase my first home last year. She was very professional and worked very quickly to help me procure financing. She made herself available around my schedule and took the time to explain my options for financing to help me get the lowest rate possible. Would highly recommend her to anyone looking for someone that is professional, highly knowledgeable, polite, and responsive.”
- James Z.
“Laura Hertz is the best lender I've ever worked with in my 25 years as a Realtor. I never have to worry that she has things handles and she always performs in the best way possible. I also know that she is an advocate for my buyers and not only does she meet their expectations but she exceeds them! She is my lender for life!”
- Paula K.
“ Mario provided excellent service. Not only was he professional and helpful, but the personal support and reliability was something hard to find these days. I will not be using anyone else and have confidently referred him to friends and family.”
- Heather C.
“Mark, Darci & Co were wonderful to work with! They were responsive, managed a complex buying situation with ease, incredibly communicative and always ensured I was caught up with what was going on and where I was in the process. Heavily recommend!”
- Zach J.
“CSMC is always our go to lender. Denise Bizzy is fabulous. She really went the extra mile trouble shooting solutions to problems our client had. I do not believe another lender would have been able to pull this off. Five stars for the A+ service from Denise Bizzy and CSMC Mortgage!”
- Mark L.
“This review is about Mark and Darci Richardson from CSMC Mortage in Simi Valley. This team is the BEST! For the past 12 years our home was "underwater" due to the "crash" in 2007, and unable to do anything with the mortgage except pay it. These two kept on top of things and finally the house qualified to REFI. We just completed everything and it closed last week... and they saved us over $900 a month!! That's a huge savings for a couple of senior citizens! We are SO happy now and finally can breathe. Thanks to Mark and Darci and CSMC Mortgage for following through, jumping through all the hoops necessary and helping us out! I can't recommend them more... they are the BEST!!!”
- Shari S.
“Darci, Mark and their team of professionals made the purchase for our amazing buyers absolutely seamless. The level of service they provide is second to none! They delivered the best rate and the best terms for the clients. Mark and Darci are very transparent with their fees and have a stellar reputation in the community. I highly recommend Darci and Mark for all your mortgage needs!”
- Gabby G.
“ My experience is always fantastic & seamless. Mayen Grigorian is a true professional. He’s honest, he goes above and beyond, he’s efficient, always available and knowledgeable. I never have to call for updates he beats me to it and sends updates regarding the loan. Our clients are very happy and we’re very happy! Five star service, I can’t say enough good things about Mayen as a person and a professional. Hands down! He’s The Best!”
- Taline S.