Community Property States And FHA Loans
There are stil a lot of people with rough credit right now, whether from the economy, loss of job, previous marriage, you name it. Some newly married couples (and some not so newly married) are having trouble buying a home together.
Maybe the wife is employed and the husband is unemployed, but he has a large car payment with no income to offset. The obvious choice is to remove one of the spouses from the transaction if the remaining spouse has enough income. 
HOWEVER: If the new loan will be an FHA insured mortgage in a Community Property State like CA, the Debts of the non-purchasing spouse must be included in the debt to income ratios.
There are nine Community Property States:
- Arizona
- California
- Idaho
- Louisiana
- Nevada
- New Mexico
- Texas
- Washington
- Wisconsin
Fortunately, the purchasing spouse is no longer penalized if the non-purchasing spouse had a short sale or foreclosure prior to their marriage. The non-purchasing spouse's credit scores are not factored into the loan decision.
Keep in mind that if the non-purchasing spouse refuses to give consent for the credit report then the loan will not be eligible for FHA insured financing. Most lenders know better, but some will still say "no problem" before actually looking at the details. Good to know this information upfront before you get too far into an FHA transaction.
Buying or refinancing a property in California? Contact Kevin Kueneke with The Lending Company by calling 760-500-1919 or click HERE to apply now.
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