Leave a Message

Thank you for your message. We will be in touch with you shortly.

Buying a Home When Your Spouse Has Poor Credit

low credit score rismedia April 11, 2024

Buying a Home When Your Spouse Has Poor Credit

Buying a home on two incomes can be difficult enough, but it can be even more demanding if one spouse has poor credit.

A poor credit score can make it difficult to qualify for a mortgage, leading to a higher interest rate on a home loan. A spouse with poor credit could be left off the loan application entirely, requiring the other person to have a high credit score and a high enough income to afford the loan on their own.

If a spouse with poor credit does qualify for a loan, the lender could require a bigger down payment on the house.

FHA loans, for example, which are backed by the federal government, require a 10 percent down payment with a FICO credit score lower than 580, while a credit score above 580 only requires a 3.5 percent down payment.

A credit score is just part of the financial background a lender looks into. Income and a debt-to-income ratio are also considered, though a high income by itself won’t overcome a poor credit score.

Credit scores range from 500 to 850. A low score of 650 can be a predictor of making late loan payments, while a 550 score means you’re not likely to pay at all.

A couple’s credit scores aren’t averaged together in a home loan application. Lenders will use the lower of the two credit scores. If a husband has a 620 score and the wife has 700, then the lower score will be used in the mortgage application and an interest rate of three-eighths to half a point higher will be charged.

Options for Those With Poor Credit

There are ways to get around one spouse having a low credit score. In the above example, the wife with a 700 credit score can get a home loan if she qualifies on her own.

Both spouses should be listed on the home’s title or deed, but only she would be listed as the borrower. The husband’s name could be added to the deed later when his credit score improves.

Buying a home on one income, however, can be difficult. The best solution is to improve the lower credit score, something that should be done months before applying for a loan.

A 10-point credit score improvement can be achieved quickly by paying down credit cards, which could be enough to get a better interest rate.

Even minor credit improvements such as closing all but one credit card can take 30 days or more to fix. Most fixes can take three to four months to show up on a credit report, so repairs should be made before applying for a loan.

Recent Blog Posts

Stay up to date on the latest real estate trends.

FLOORS

Should You Replace Your Carpet with Tile Flooring? Here’s What You Need to Know

Is Tile Flooring the Best Option for Your Home? Weigh the Pros and Cons Before Making a Decision

SECONDARY LIVING

How to Design an In-Law Apartment That's Safe for Your Aging Parent

Essential Tips for Creating a Comfortable and Secure Space for Your Elderly Loved One

ELECTRICITY

5 Common Misconceptions About Electricity Usage: How to Save Big on Your Utility Bills

Clear Up the Myths About Electricity and Learn How to Cut Costs with Simple Adjustments

CREDIT CARD

Why Keeping a Seldom-Used Credit Card Open Can Benefit Your Credit Score

Learn How Keeping an Inactive Credit Card Open Can Improve Your Credit Health

DRIVEWY

Should Your Custom Home Have a Circular Driveway? Pros, Cons, and Design Tips

Learn how adding a circular driveway can enhance your home’s curb appeal, improve parking, and elevate its value.

Gutters

How Gutter Guards Can Boost Your Home's Value: Protect and Save

Discover How Installing Gutter Guards Can Enhance Your Home’s Curb Appeal and Reduce Maintenance Costs

House Warming Party

Tips for a Successful Housewarming Party: Celebrate Your New Home in Style

From choosing the perfect date to entertaining guests, these housewarming party tips will help you host a memorable event that showcases your new space with ease.

Flooding

What to Do If Your House Floods During a Storm: Key Steps for Protecting Your Home and Family

Stay Safe and Secure: Essential Flooding Steps for Homeowners in North and South Carolina

First Time Homebuyers

What to Consider as a First-Time Homebuyer: A Complete Guide to Making Smart Decisions

Your First Home Purchase Doesn't Have to Be Overwhelming: Key Factors to Guide You

Work With Us