Most married or engaged couples thinking of buying a house combine their income and credit scores when applying for a mortgage. But sometimes, doing so may not help you achieve your goals, provoking the question: Can a married couple buy a home with only one partnerâs name on the mortgage? The short answer is yes, though you want to understand the pros and cons of getting a mortgage without your spouse.
Buying a home is an exciting milestone for any couple, but it also involves making some big financial decisions One of those is determining whose name(s) will go on the mortgage and title for the new house There are advantages and disadvantages to having only one spouse apply for the mortgage loan when a married couple purchases a home together. Let’s explore when and why putting just one partner on the home loan might make sense.
How Common is it for Married Couples to Buy Under One Name?
While it’s typical for both spouses to be on the mortgage and title when a married couple purchases a home, it’s not uncommon or illegal for only one spouse to buy the house. Over 40% of married couples keep at least some finances separate. With the rise of women’s financial independence and nontraditional family structures, single-applicant home purchases are becoming more common.
Reasons a Married Couple Might Buy Under One Name
There are several scenarios where a married couple may strategically purchase a home with only one spouse on the mortgage and/or title,
One Partner Has Credit Challenges
If one spouse has a low credit score or significant debts, it can negatively impact the mortgage terms the couple can qualify for. For example, a credit score below 620 will disqualify you from a conventional loan. Even a score in the mid-600s could saddle you with a higher interest rate. Leaving the lower-scoring partner off the application can help the couple get better approved for a mortgage with preferable rates and terms.
Protect Assets in Case of Divorce
Keeping one spouse off the mortgage and title can make it easier to split assets if the couple divorces. The spouse who is not on the home documents has no legal claim or responsibility for the property. This simplifies dividing up property because only one person owns and owes on the home.
Simplify Estate Planning
If the couple wants to ensure the home passes to one spouse’s desired beneficiary, rather than the surviving spouse when the owner dies, sole ownership avoids complications. The owning spouse can bequeath the home directly to the chosen heirs.
Limit Exposure to Liability
Owning a home opens homeowners up to liability risks, like injuries on the property or lawsuits against you. If only one spouse is on the mortgage and title, the other spouse’s assets are shielded from seizure in case of a legal judgment related to the property.
Qualify for a Mortgage with One Income
If one spouse is unable to work or document income, the couple may need to qualify for a mortgage with only the other spouse’s income. Common reasons include unemployment, disability, being a student or stay-at-home parent.
Buy More Home with Combined Income
In most cases, two incomes allow a couple to qualify to buy a more expensive home than one income alone. But exceptions can occur if one spouse’s debt obligations outweigh their income contribution.
Disadvantages of Buying Under One Name
While there are certainly scenarios where buying a home under one spouse’s name makes practical sense, there are downsides to consider as well.
- Reduced Buying Power: Combining two incomes often increases the amount a couple can borrow, allowing them to buy a more expensive home. Relying on one income will restrict purchase price.
- Lack of Ownership Rights: The spouse not on the mortgage or deed has no legal rights regarding the property and must rely on their partner’s cooperation regarding the home.
- Complicated Asset Division If Relationship Ends: The non-owner spouse would need to prove contributions they made to the home in order to claim any portion of equity in divorce.
- More Difficult to Refinance: Both spouses have to approve refinancing an existing mortgage. With one income, qualification may be challenging.
- Shared Debts Impact Single Applicant: In community property states, the income, assets, debts and credit history of both spouses are considered, even if just one applies.
- Higher Insurance Rates: Home insurance often costs less for married joint homeowners than a single owner.
How to Hold Title as a Married Couple
How you take title as a married couple purchasing real estate together depends in part on whether you live in a community property state or common law state.
Community Property States
In the nine community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI), property acquired during a marriage is considered jointly owned by both spouses, even if only one spouse is on the mortgage and title. All assets and debts are divided equally in a divorce.
Common Law States
In common law states, whoever is named on the mortgage and deed is the legal owner. Assets belong to the acquiring spouse unless specifically jointly titled. Debts are also owned by the incurring spouse.
Title Options
- Joint Tenancy: Joint ownership with rights of survivorship.
- Tenancy in Common: Joint ownership without survivorship rights. Interests can be divided unequally.
- Tenancy by the Entirety: Joint ownership between married spouses with survivorship rights.
Strategies for Buying Under One Name
If you’ve weighed the pros and cons and decide buying under one spouse’s name suits your situation, here are a few tips:
- Seek legal guidance to understand laws in your state.
- Consider a postnuptial agreement to outline ownership interests.
- Apply only under the name of the spouse with better credit/income.
- Add non-applicant spouse to title later via quitclaim if desired.
- Refinance when possible to get both spouses on the mortgage.
- Investigate insurance pricing to compare joint vs single policies.
Consult an Expert
Buying a home as a married couple can certainly get complicated. Connect with real estate and legal professionals to understand all your options and the potential pitfalls before committing to a purchase. An expert can help craft a personalized home buying strategy for your family and financial circumstances.
The Bottom Line
While counterintuitive, there are definitely situations where it makes practical and financial sense for a married couple to purchase a home with only one spouse on the mortgage and title. By weighing the advantages against drawbacks and consulting professionals, couples can make an informed decision about the best home buying approach for their unique situation. With careful planning, even nontraditional purchases can set a family up for long-term homeownership success.
One Spouse Wants to Protect Their Assets
Another reason for one partner to apply alone for a home loan is to protect the other spouseâs assets.
Owning a home can open you up to liability. For example, what happens if a guest gets injured while on your property? You could be sued and found liable for medical care and damages. If only one spouse owns the home, the other spouseâs assets may be protected from being included in a judgment. The same could be true if you struggle to make mortgage payments and the lender comes after you for repayment. The assets of the spouse not on the mortgage could be safe from the lender.
Whether only putting one spouse on the loan protects the other spouseâs assets depends on the property laws in your state. Check with a legal expert to ensure you understand the implications of keeping one spouseâs name off the mortgage and deed.
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One Spouse Is Carrying A Lot Of Debt
Lenders also look at your debt-to-income ratio, which shows how much of your gross monthly income is dedicated to debt payments. While specific DTI ratio requirements vary by loan type and lender, the industry rule of thumb is known as the 28/36 rule. That means your front-end DTI ratio, which compares your mortgage payment to your gross income, should not exceed 28%. The back-end DTI ratio, which compares all debts to your income, should not exceed 36%. If one spouse has a lot of debt that would raise your DTI ratio, you might want to apply for your loan in the other spouseâs name.
Legal Issues for Unmarried Partners Buying a Home Together
FAQ
Can a married woman buy a house without her husband?
Yes, you can buy a house without your spouse’s involvement. Here are some key points to consider: Ownership Structure: If you’re purchasing the house solely in your name, you will be the sole owner. This means your spouse will not have any legal claim to the property unless you decide to add them later.
What happens if a spouse’s name is not on a deed?
In community property states, such as California, if you acquired your home while you are married, the value of your home is equally shared between you and your spouse, whether your name is on the deed or not. This is the default situation and prevents one spouse from losing the home in the event of a divorce.
What happens if your wife is not on a mortgage?
In community property states, property acquired during the marriage is typically seen as belonging equally to both spouses, and this holds true even if your name is not on the mortgage. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Can a married couple buy property separately?
A married couple can buy separate properties. In most states, the mortgage and title will only have one partner’s name, and the asset will completely belong to the individual who purchased it.