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Can spouse be non-borrower help qualify for HomeReady?

Can a spouse be a non-borrower household member on a HomeReady mortgage? My husband has a better credit score than me so I want to determine if should be a non-borrower household member instead of a co-borrower on the loan.

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

We provide a comprehensive overview of the HomeReady Program on FREEandCLEAR as well as an overview of the Pros and Cons of the HomeReady Program that you can review. While technically I think a spouse is permitted to be a non-borrower household member when applying for a HomeReady Mortgage according to program guidelines, there are drawbacks to this approach that you should consider.

According to HomeReady Program guidelines, the income from a non-borrower household member (you in this case) is not included in the income figure used to calculate what size mortgage the borrower can afford. Instead, the lender uses the non-borrower household member income as a "compensating factor" to apply a higher debt-to-income ratio to the borrower's income (your husband in this case), which enables him to qualify for a higher mortgage amount. Using non-borrower household member income may allow the lender to apply a debt-to-income ratio of up to 50% as compared to the standard ratio of 43% to 45%. The higher the debt-to-income ratio, the higher the mortgage amount you can afford.

Depending on what size mortgage you want, however, it may make more sense for you and your husband to apply for the mortgage as co-borrowers. When you apply for the mortgage as co-borrowers, the lender uses the income from both borrowers to determine what size mortgage you qualify for. In this scenario, even though the lender uses the lower, standard debt-to-income ratio of 43% for co-borrowers, you likely qualify for a larger mortgage amount because the lender uses both of your income's to determine what size mortgage you can afford.

The example below compares the scenario where your husband applies for the mortgage as a sole borrower with you as a non-borrower household member to the scenario where you and your husband apply for the mortgage as co-borrowers. In the scenario where you apply as co-borrowers, the lender uses a higher income amount which enables you to qualify for a larger mortgage. This is particularly helpful in the case where one spouse makes significantly more than the other spouse. This is only an example that uses example figures but it enables you understand how the qualification process works.

Example Assumptions  

Husband monthly income: $1,000 

Wife monthly income: $2,000

Scenario 1: Husband applies for the mortgage as a sole borrower with you as a non-borrower household member

Borrower monthly income: $1,000

Debt-to-income ratio used: 50%

Monthly income used to determine mortgage qualification: $500 ($1,000 * 50%)

Scenario 2: You and your husband apply for the mortgage as co-borrowers

Borrower monthly income: $3,000 ($1,000 + $2,000)

Debt-to-income ratio used: 43%

Monthly income used to determine mortgage qualification: $1,290 ($3,000 * 43%)

The downside to applying for the mortgage as co-borrowers is that lender typically uses the lower credit score between the two borrowers. Using a lower credit score may result in a higher interest rate or more challenging borrower qualification requirements such as a higher down payment. A positive feature about the HomeReady Program is that it permits borrowers with a credit score as low as 620 and potentially lower in certain circumstances.

Additionally, when you apply for a mortgage as co-borrowers the lender also uses the monthly debt expense from both borrowers to determine what size mortgage you qualify for. So if you have debt such as a credit card bill that is only in one person's name that is another consideration.

Ultimately, the approach you should take depends on what size mortgage you need to buy a home and if you can qualify for that loan amount using only your husband's income. If you can qualify the loan amount you want using only your husband's income then using you as a non-borrower household member may make sense because you will likely pay a lower interest rate, depending on his credit score. If you cannot qualify for the loan amount you want using your husband's income, then you should consider applying for the mortgage as co-borrowers. Although your interest rate may be higher, you can likely qualify for a larger mortgage and accomplish your goal of buying a home.

Our recommendation is that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area by clicking INTEREST RATES We advise you to contact at least four lenders as qualification guidelines can vary and not all lenders offer the HomeReady Program. Plus comparing proposals is the best way to save money on your mortgage.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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