The Non-purchasing Spouse

May 12, 2011

First-time home buyers looking into an FHA mortgage soon learn about a variety of requirements. Some are the rules set by a particular lender, others are dictated by the Department of Housing and Urban Development, while others are established by state laws that govern retail banking procedures. Of these guidelines, it's usually the state laws that can vary the most. One example of this is the "non-purchasing spouse" rules in certain states. Did you know that depending on where you live, an FHA home loan may require the signature of your spouse on FHA loan paperwork even if the spouse isn't a co-borrower or co-signer?

This often applies for first mortgages; often the non-purchasing spouse's signature is simply used to recognize that the spouse has no claim on the property--the loan is in the name of the individual borrower only. In these cases the signature affirms the spouse is A) not a borrower, and B) that the spouse is not required to sign the contract for the loan itself.

Some states require the spouse's debt to be considered in what FHA home loan paperwork describes as the borrower's "qualifying ratios". A community property state is most likely to include this requirement; community property states basically require all property in common to be owned on a 50-50 basis as a result of the marriage. Under the law in community property states, each partner has liability for the other spouse's debts.

In such cases, the non-purchasing spouse would need to submit to a credit check; however bad credit reports on a non-purchasing spouse can't be used to deny an FHA mortgage to a qualified borrower.

FHA mortgage loan applicants should know that such rules may be applicable even in the midst of divorce proceedings (unless otherwise provided for under state law). FHA loan applicants may be legally separated from the spouse and about to finalize the divorce, but until the marriage has been legally dissolved the borrower may be required tol submit the non-purchasing spouse's signature on the required documents unless state law offers some form of relief.

According to FHA loan rules, the non-purchasing spouse signature requirement is for first liens; for other situations the spouse will not appear on the loan documentation, and non-purchasing spouses do not get title to the property bought with an FHA home loan once the loan is paid in full.