When purchasing a home, most married couples apply for the mortgage together. But there are some situations where a homebuyer may want to get a conventional loan without their spouse.
In most cases, this isn't a problem. But the same can't always be said about other types of home loans, including government-backed mortgages offered by the FHA, VA, and USDA. Ultimately, some aspects depend on the marital property laws in your state.
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Marital Property Laws Vary by State
Not all states view marital property, that is, property acquired during your marriage, the same. While some may have unique rules regarding marital property, they can all be divided into one of two categories: community property states and common law property states.
Conventional Loans in Community Property States
In a community property state, all assets earned by either spouse are considered the equally shared property of both partners.
However, for conventional loans, your spouse's debt does not need to be considered in debt-to-income ratios if they are not on the mortgage application.
There are nine states which observe community property in a marriage:
Arizona
California
Idaho
Louisiana
Nevada
New Mexico
Texas
Washington
Wisconsin
In addition, the US territories of Puerto Rico and Guam observe community property laws. Alaska, Kentucky, Florida, and Tennessee allow married individuals to enter into a community property agreement. However, this only affects your home purchase if both partners have formally opted in.
In most cases, your partner will need to be named on the title in these states.
Government-Backed Loans in Community Property States
Government-backed mortgages, which include FHA, VA, and USDA loans, follow a slightly different protocol in community property states. Yes, you can apply for a mortgage without your spouse, but these lenders will still be required to consider your partner’s existing debts when calculating your debt-to-income ratio (DTI).
That's because community property laws work both ways: assets are shared equally between both partners, but so is the responsibility for debt.
Conventional and Government Loans in Common Law Property States
Apart from the nine community property states, the rest of the United States falls under common law property rules. Under common law, assets (and debts) acquired by one spouse belong to them exclusively. There is no expectation of shared ownership or responsibility.
Common law property can be summed up by the adage, "What's mine is mine, and what's yours is yours."
In all common law property states (including elective states where the marriage has no formal community property agreement), you can apply for a conventional loan without your spouse. Only your credit history, income, and debt obligations will be considered by lenders, and you do not need to include your partner on the title to the property.
The same applies to mortgages backed by the FHA, VA, and USDA, which do not include your spouse’s debt obligations when calculating DTI in common law states.
Note: You still have the option to add your spouse to the property's title in common law states, even if they aren't on the mortgage. But unlike in locales that observe community property, you are under no obligation to in most cases.
Reasons to Apply for a Conventional Loan Without Your Spouse
There is often a financial motivation when one spouse applies for a loan without their partner. Frequently, this is because one spouse has a much better credit score than the other and can qualify for a conventional loan with lower costs than if they were applying jointly.
Some other reasons why you may want to apply for a conventional loan without your partner include:
They have the majority of debt in their name and have little qualifying income.
They don’t have verifiable or sufficient income documentation. This could apply to someone facing job loss or furlough or even to a self-employed business owner who doesn’t have the required two years of tax returns from their recently started business.
You're utilizing a tax or estate planning strategy, which makes it advantageous to take a loan in your name only.
You're purchasing an investment property with a higher level of risk, and you want to limit credit repercussions to one spouse in the event of default.
Your spouse has a judgment against them or plans to file for bankruptcy, and you want to protect your home from claims by creditors.
Mortgage Costs When One Spouse Has a Low Credit Score
One of the most common reasons for someone to apply for a loan without their spouse is because of poor credit. A low credit score can drive up mortgage rates and payments, especially for conventional loans.
That’s because when it comes to interest rates and fees, lenders base their figures on the co-borrower with the lowest credit score.
Loan-Level Price Adjustments
Most conventional loans have loan-level price adjustments (LLPAs) that vary based on your credit score. This helps lenders to compensate for higher-risk transactions. The most notable exceptions are LLPA waivers for first-time homebuyers and low-income programs like HomeReady and Home Possible.
For the majority of conventional loans, however, you'll likely notice significant savings applying alone rather than with a spouse who has a low credit score.
For example, the score-based LLPA when purchasing a home with 20% down would be:
Credit Score | Score-Based LLPA | Cost on a $400,000 Loan |
620 – 639 | 2.750% | $11,000 |
640 – 659 | 2.250% | $9,000 |
660 – 679 | 1.875% | $7,500 |
680 – 699 | 1.750% | $7,000 |
700 – 719 | 1.375% | $5,500 |
720 – 739 | 1.250% | $5,000 |
740 – 759 | 0.875% | $3,500 |
760 – 779 | 0.625% | $2,500 |
780 or above | 0.375% | $1,500 |
Borrowers usually choose a higher rate in lieu of paying the LLPA fee out-of-pocket. At the end of the day, though, lower credit scores on the application will cost you more.
Private Mortgage Insurance
Applying with your spouse, who has a low credit score, also means paying more for private mortgage insurance if you plan to put down less than 20% on your purchase.
Unlike the mortgage insurance premium assessed on FHA loans (which is based on your down payment and loan amount), PMI can vary depending on your credit score. Recent data compiled by the Urban Institute shows that conventional borrowers with a credit score between 620 and 639 pay an average annual PMI of 1.50%. For borrowers with credit scores above 760, that average drops to just 0.46%.
Annual Percentage Rate
Your loan's annual percentage rate combines its interest rate and other associated costs. It provides a more representative idea of how much you could save by applying for a conventional loan without your spouse if they have a low credit score.
Here’s an example of how much you might expect to pay each month, as well as the total interest you’ll pay across the life of the loan, with a $400,000 30-year fixed-rate mortgage.
Credit Score | Example APR* | Principal & Interest Payment | Total Interest |
620 – 639 | 8.992% | $3,216 | $757,828 |
640 – 659 | 8.446% | $3,060 | $701,729 |
660 – 679 | 8.016% | $2,940 | $658,228 |
680 – 699 | 7.802% | $2,880 | $636,813 |
700 – 759 | 7.625% | $2,831 | $619,223 |
760 or above | 7.403% | $2,770 | $597,322 |
*Example rates from MyFico.com loan savings calculator, accessed 11/2/23. Interest rates are for example purposes only. Not a quote or commitment to lend. Rates may not be available.
In short, a 620 score on the application instead of a 760 could cost you $160,000 over 30 years.
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Conventional Loan Without Spouse FAQs
Here are a few of the most common questions about applying for a conventional loan without including your spouse as a co-borrower.
Can I use funds from a joint bank account when applying for a conventional loan without my spouse?
Yes, if you and your spouse share a joint bank account, you can use those funds for your down payment, closing costs, and required reserves, even if your partner is not a co-borrower on the mortgage.
Can I use funds from my non-borrower spouse if we don’t have a joint bank account?
Yes, your non-borrower spouse can contribute funds to your home purchase, even if you don’t share a joint bank account. However, the contribution must follow conventional loan guidelines for gift funds.
If I get a conventional loan without my spouse, can I add them to the mortgage or title later?
In most cases, you can add your spouse to the property's title with a quitclaim deed. This does not affect your responsibility to the lender, though. Adding your spouse to the mortgage later would require refinancing the loan and your partner meeting eligibility guidelines.
Applying for a Conventional Loan Without My Spouse
In most cases, you won’t have an issue getting a conventional loan without adding your spouse to the mortgage application. There are many situations where this is a financially wise decision to make. But remember that in doing so, you’ll need to meet income requirements and other lending guidelines without their assistance.
If you’re ready to apply for a home loan and want to see how much of a mortgage you can qualify for without your spouse, contact a lending professional to discuss your unique situation and needs.
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About The Author:
Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, and more.
