FHA non borrowing spouse in a community property state

[Anonymous]

I guess I'm a little confused. Yesterday, I was at our local credit union in Arizona and they told me that they basically shop me around for the best rate but since we are in a community property state that they would take into account both our credit scores. I am at a 726 and my wife is around 686 since she has a $400 unpaid medical collection from 5 years ago. I plan on going the FHA route and I have read that they can take only my score into account if I am the only borrower on the loan. The person at the credit union said that they have to take both of our scores into account and they would take the lower score between us. Is this correct? Should I shop around for a different lender? Also at this point, should I just pay off her old medical collection? We had disputed it way back when because insurance was supposed to take care of it - but at the same time I don't want it holding up our loan. Maybe I can pay it in exchange for them wiping it completely off the report?

[Anonymous]

You cuold pay it off and see if they will delete it.  That would be the best for your wife's credit profile but if it is just you on the loan then they should only take into account your credit score.  Since you are in a community property state they will still look at your wife's credit because they would have to count both of your debts for debt to income ratio reasons.  They won't use her score though. (Mod Cut-Solicitation is a TOS violation please cease & desist)  if you have other questions i would be happy to answer them.  Just let me know.

[DallasLoanGuy]

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@Anonymous wrote:

I guess I'm a little confused. Yesterday, I was at our local credit union in Arizona and they told me that they basically shop me around for the best rate but since we are in a community property state that they would take into account both our credit scores. I am at a 726 and my wife is around 686 since she has a $400 unpaid medical collection from 5 years ago. I plan on going the FHA route and I have read that they can take only my score into account if I am the only borrower on the loan. The person at the credit union said that they have to take both of our scores into account and they would take the lower score between us. Is this correct? Should I shop around for a different lender? Also at this point, should I just pay off her old medical collection? We had disputed it way back when because insurance was supposed to take care of it - but at the same time I don't want it holding up our loan. Maybe I can pay it in exchange for them wiping it completely off the report?

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it might be true for that particular credit union.....  but that is NOT the rule for most lenders.

[BrianB_The_Loan_Professor]

Tom is correct if there is an overlay (banks add on guideline) they may look at both scores but that is not the norm

The spouses debt is included in the debt to income ratio - in a community property states what they owe you owe - 

As long as the single income is enough to qualify for a loan using both spouses debts it shouldnt be an issue and they should just use the score of the person who is on the loan..

Good Luck

B