How Your Marital Status Impacts Your Mortgage

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Tying the knot doesn’t just mean a lifelong commitment, it comes with lots of financial implications, like raising or lowering your taxes, affecting insurance premiums, the type of retirement accounts you can get, and, possibly your mortgage. Your marital status, single, married or divorced, or even in a long-term, committed relationship, can affect your ability to get a mortgage as well as your interest rate, whether you’re looking at Los Angeles, Dallas, New York City or Atlanta real estate.

While lenders cannot deny you a loan because of your marital status, that doesn’t mean your it can’t help or hurt your chances to qualify.

You’re Married


Being married can help when you’re ready to apply for a mortgage if both of you work. When you apply together, you’ll be able to use both of your incomes, which means lenders may be able to approve you for a larger loan. At the same time, marriage can mean problems if one partner has a poor credit score or heavy debts as the lender will only consider the lowest middle score of the three FICO credit scores (from TransUnion, Equifax and Experian) between you and your spouse. For example, if you have credit scores of 720, 730 and 750, but your spouse has scores of 590, 610 and 620, the lender will only consider your spouse’s 610 score to determine whether you’ll qualify for the mortgage, and if so, at what interest rate. If your spouse has low credit scores, you may not want to apply jointly for a mortgage, but that also means your spouse’s income won’t be counted when determining the loan amount.

You’re in a Long-Term, Committed Relationship


MONEY conducted a poll of 500 millennials and found that 40% believe it’s a good idea for a couple to purchase a home together before getting married, while 37% indicated that the purchase should take place prior to marriage.

Whatever your views, if you’re even thinking about buying a home with a partner you aren’t married to, you’ll need to seriously evaluate whether you’re ready to make such a big commitment. It can be even harder to divide up jointly-owned property if you break up as there are no requirements to legally split up property if the relationship ends. It’s not a bad thing necessarily in the eyes of lenders when it comes to applying for the mortgage – you’ll be able to combine your incomes like a married couple, and the lender will still look at your credit scores the same way, but two separate applications will be used if you’re not married. Those applications are then combined, labeled “borrower” and “co-borrower.” The primary borrower is usually the one with the higher income.

You’re Divorced


A lender can’t discriminate against someone who is divorced, but they will look at income and debts, including how much, if any, you pay every month for alimony or child support. Lenders want your monthly debts to be as low as possible, including the new potential, estimated mortgage payment – if those debts are too high, you might have a hard time getting approved. If you’re on the opposite side of the coin, receiving alimony or child support, that income can help you qualify, but the lender will need a copy of the divorce decree and court order to see in writing who is responsible for what.

You’re Single


The only negative to being single is that you’ll have to qualify for the loan with only your income. Provided you earn enough money, it won’t be a strike against you. If you don’t meet the financial requirements and have a relative or someone else willing to be a co-signer, you may still be able to qualify, but that person will have to agree to make your mortgage payments – potentially putting a big strain on the relationship.

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