Non-Purchasing Spouses on FHA Home Loans
May 17, 2020
When an FHA borrower applies for a loan and the spouse does not co-sign or co-borrow, are there situations where the spouse would be obliged to sign loan documents? It's a commonly asked question, especially in states where "community property" laws exist.
Indeed--state law is often the determining factor. The FHA itself has no requirement for a non-borrowing spouse to sign loan paperwork, but states which require certain types of documentation for "valid and enforceable" loans could need a signature from the non-borrowing spouse. But do such signatures legally obligate the spouse in any way?
State laws covering such instances often require a signature to indicate the non-borrowing spouse's status on the loan; the non-borrower is not obligated by law to become financially responsible-instead, a signature is required to identify the status of the spouse as a non-borrower or co-borrower as appropriate.
According to the FHA official site, "If required by state law in order to perfect a valid and enforceable first lien, the non-purchasing spouse or non-borrowing party with ownership interest in the property may be required to sign either the security instrument or documentation indicating that the individual is either.relinquishing all rights to the property or retaining an ownership interest in the property (when the purchasing/borrowing party is applying for the loan and credit qualifies for the loan on his or her own)."
All co-borrowers on an FHA-insured home loan must submit credit and employment data in the same manner as the primary borrower. If a non-purchasing spouse changes his or her mind and wants to become part of the loan before it has closed, they are required to submit the same application data as the original FHA loan applicant.
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Indeed--state law is often the determining factor. The FHA itself has no requirement for a non-borrowing spouse to sign loan paperwork, but states which require certain types of documentation for "valid and enforceable" loans could need a signature from the non-borrowing spouse. But do such signatures legally obligate the spouse in any way?
State laws covering such instances often require a signature to indicate the non-borrowing spouse's status on the loan; the non-borrower is not obligated by law to become financially responsible-instead, a signature is required to identify the status of the spouse as a non-borrower or co-borrower as appropriate.
According to the FHA official site, "If required by state law in order to perfect a valid and enforceable first lien, the non-purchasing spouse or non-borrowing party with ownership interest in the property may be required to sign either the security instrument or documentation indicating that the individual is either.relinquishing all rights to the property or retaining an ownership interest in the property (when the purchasing/borrowing party is applying for the loan and credit qualifies for the loan on his or her own)."
All co-borrowers on an FHA-insured home loan must submit credit and employment data in the same manner as the primary borrower. If a non-purchasing spouse changes his or her mind and wants to become part of the loan before it has closed, they are required to submit the same application data as the original FHA loan applicant.
------------------------------
RELATED VIDEOS:
Here's the Scoop on Conventional Loans
When Do You Need a Cosigner?
Analyzing Your Debt Ratio
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