VA Home Loan in California - Question regarding inclusion/exclusion of spouse

[Anonymous]

I'm wondering if I'll have any issues when applying for a VA home loan if my wife's credit has some CO's from 5-6 years ago.  Here are some background details:

Me:

Disabled veteran (VA funding fee is waived)  

I make all of our income ($102K/year) which is a federal govt. job

No car payments

$15K in student loans (for me, which will be deferred again because I"m entering a Master's program)

Two credit cards with zero balance

No late payments in the past 12 months

Wife:

Not a veteran

No income

No payments

AU on the Amex card I have, which is zero balance

CO's from 5-6 years ago

All collections paid or PFD

Now, our scores are going up because we're waiting for certain PFD items to fall off, and the recent payments on the CC balances to show.  Once everything settles I'll want to apply for the loan, assuming both score are above 640 (which I already am, just gotta get her there as well).

What issues will I run into with her CO's?  They're past the SOL, about $2500 combined, and will fall off her report in the next year or two, so I don't really want to pay them.  I'd rather focus that money elsewhere.  Does this mean that I'll most likely have to remove her from the loan to qualify?  My DTI ratio is VERY low, like less than 8%.  Even if they did include her CO's, it wouldn't make that much of an increase to my DTI.  Thoughts?  Thanks for the help!

[ceejx]

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@Anonymous wrote:

I'm wondering if I'll have any issues when applying for a VA home loan if my wife's credit has some CO's from 5-6 years ago.  Here are some background details:

Me:

Disabled veteran (VA funding fee is waived)  

I make all of our income ($102K/year) which is a federal govt. job

No car payments

$15K in student loans (for me, which will be deferred again because I"m entering a Master's program)

Two credit cards with zero balance

No late payments in the past 12 months

Wife:

Not a veteran

No income

No payments

AU on the Amex card I have, which is zero balance

CO's from 5-6 years ago

All collections paid or PFD

Now, our scores are going up because we're waiting for certain PFD items to fall off, and the recent payments on the CC balances to show.  Once everything settles I'll want to apply for the loan, assuming both score are above 640 (which I already am, just gotta get her there as well).

What issues will I run into with her CO's?  They're past the SOL, about $2500 combined, and will fall off her report in the next year or two, so I don't really want to pay them.  I'd rather focus that money elsewhere.  Does this mean that I'll most likely have to remove her from the loan to qualify?  My DTI ratio is VERY low, like less than 8%.  Even if they did include her CO's, it wouldn't make that much of an increase to my DTI.  Thoughts?  Thanks for the help!

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If you keep her off the loan, you will have no problems. I'm in a community property state, my wife has terrible credit, but my middle score was 704 and I have a good credit profile. They only used her monthly payments reported on credit for DTI calculations, and ignored everything else. She just had to sign a quit claim deed transferring ownership to me. If you're not in a community property state you don't even have to worry about that.

But if you do want to keep her on the loan, if her charge-offs are that old (mine was 6yo when I applied and didn't affect me) then I doubt she will have problems either. To make it easy, talk to the loan officer, go for it with both of you, but if the LO has a problem, you can always move her off the loan after the fact.