Markets

When Should You Get a Mortgage Without Your Spouse?

A mature person looks at mortgage paperwork on their couch.

Image source: Getty Images

If you are married and want to buy a house with your spouse, chances are good you'll apply jointly for a mortgage. When you apply for a shared loan, lenders will consider both of your incomes so you may be able to get approved to borrow a larger amount of money. You'll also both be legally responsible for repaying the debt, so it will be a shared financial obligation you can work on together.

But while it often makes sense to get a home loan with your spouse, that's not necessarily the right choice in every situation. In fact, there are a few different circumstances where you may be better off applying for a loan on your own and not naming your spouse as a co-borrower when requesting to borrow. Here are two of them.

1. If your spouse has bad credit

Your credit score is one of the most important factors that determines if you will be able to qualify for a home loan and if you will get a competitive rate from lenders. If you have stellar credit but your spouse has a low score or no score, then you may want to apply for a loan on your own. That way, your spouse's low score won't send up red flags that could make it more difficult to get the best possible rate.

2. If your spouse has a lot of debt

If your spouse has a lot of debt, this can also affect your ability to get approved for a loan. That's because lenders take your debt-to-income ratio into account. This means they look at your total debt, relative to your total income, in order to determine how much to lend and what rate to offer you.

Ideally, your debt-to-income ratio will be 36% or lower to get the most competitive rates. That includes all debt including your new monthly housing payment after you get your mortgage. Unfortunately, if your spouse owes a lot of money, it could lead to a higher ratio that affects your ability to borrow -- especially if they have a low income or no income at all.

You'll need to consider how much your partner earns, relative to their debt, to decide if it makes sense not to include them as a co-borrower. If they have large loan payments but make a lot of money, then it may still be beneficial to include them -- but look at your debt-to-income ratio both independently and together when deciding what's likely to lead to your best chance of loan approval.

Other considerations when getting a mortgage without your spouse

If you're getting a mortgage without your spouse, you'll also need to consider other complex financial issues this can raise. For example, will you want to name your spouse as a co-owner on the property even if they aren't a co-borrower on the loan? And you'll also need to consider what the rules would be if you divorced, as the rights and obligations of each spouse can be affected by whether you live in a community property state.

Talking with a lawyer or financial advisor could be beneficial because this is a big decision with long-term consequences for your finances. But, the bottom line is, it does sometimes make sense to get a mortgage on your own even if you're married -- you just need to make sure you think the decision through carefully before you act.

A historic opportunity to potentially save thousands on your mortgage

Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.

Our expert recommends this company to find a low rate - and in fact he used them himself to refi (twice!).

Read our free review

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More