FHA and Non Borrowing spouse debt

rwanjuhi · ‎04-03-2016

I have a question for you guys.

In a community state. What is considered from a non borrowing spouse credit? Charge offs, collections? I have tried to read through the boards and can't quite figure it out. My husband and i intend to go the FHA route and i will be the borrower. His credit is not the best as he has several charge offs and collections. Trying to figure out if that will be a problem.

Thanks

thegrapelady · ‎04-04-2016

I am in a community property state (WA). I am purchasing a home and will be the only borrowed. My spouse is in school and doesn't have very good credit. I was told that her credit will not be a factor since I am the only person on the loan. I sure hope that really is the case because my file is currently in UW. It was even pre-underwritten and they never asked questions about her credit other than her student loans which I co-signed for her. Good luck!

rwanjuhi · ‎04-04-2016

Thank you thegrapelady, that is good to hear. Are you going the FHA route? Please continue to update us with your progress and good luck! I am quite anxious about starting this process and I am trying to understand as much as I can before hand.

thegrapelady · ‎04-04-2016

Yes, we are going FHA. We almost went conventional but ended up going FHA because my score was just a few points off. My only advice is be as prepared as possible, and pick a mortgage broker/banker you know is good or recommended. Feel free to message me if you have any questions about the process we went through. Good luck!

thegrapelady · ‎04-04-2016

Update: A terrible update! Despite my loan officer and processor all reassuring me that my spouse's debt/student loans did not matter, the UW came back with approval with conditions which required my spouse's student loan information, which I did NOT co-sign for. My loan officer and the processor are absolutely shocked by this and say they have never had it happen. I have no idea what will happen. I am pretty livid at the moment. I'll update with what I find out.

Anonymous · ‎04-04-2016

@thegrapelady wrote:
Update: A terrible update! Despite my loan officer and processor all reassuring me that my spouse's debt/student loans did not matter, the UW came back with approval with conditions which required my spouse's student loan information, which I did NOT co-sign for. My loan officer and the processor are absolutely shocked by this and say they have never had it happen. I have no idea what will happen. I am pretty livid at the moment. I'll update with what I find out.

See if your loan can be flipped to conventional. Only the government loans require spousal debt to be factored in community property states.

thegrapelady · ‎04-04-2016

Thanks dpeezy! We initially were going to do conventional, but they said my mid credit score needed to be 700, unfortunately it was 680. We are putting 10% down.

StartingOver10 · ‎04-05-2016

@thegrapelady wrote:
Thanks dpeezy! We initially were going to do conventional, but they said my mid credit score needed to be 700, unfortunately it was 680. We are putting 10% down.

^^that is a lender overlay

thegrapelady · ‎04-05-2016

Ugh. Thanks. They seem to think the UW might make an exception and approve me because these loans were obtained before we were married. They say they are making a good case. I have no idea what to think anymore. The UW is in house, but still, I am not even sure this is can be a possibility.

Anonymous · ‎04-05-2016

@thegrapelady wrote:
Ugh. Thanks. They seem to think the UW might make an exception and approve me because these loans were obtained before we were married. They say they are making a good case. I have no idea what to think anymore. The UW is in house, but still, I am not even sure this is can be a possibility.

I highly doubt this will fly. If your lender can't get you a conventional loan at 680, I would have backup lenders/options ready.