When a couple applies for a joint mortgage to buy real estate, their income is combined to give them more purchasing power. However, at the same time, any debt borne by either spouse is also counted as joint mortgage debt. If someone has a lot of debt to their name, it could affect your eligibility for a spouse loan, your loan options, and your mortgage rates.

With that in mind, here are the steps you can take to apply for a mortgage when you are in debt. You can also consult an online mortgage broker like Credible at preview your pre-qualified mortgage rates that you take the road to the condominium.

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Will my spouse’s debt affect our joint mortgage application?

Unfortunately, if you decide to use your spouse as a co-borrower, it is likely that their debt will affect your loan options. Simply put, mortgage lenders have strict requirements regarding the debt ratios they will accept.

Typically, they look for an initial ratio of 28%, which is the amount of income that will be spent on housing costs. They also look for a back-end ratio of 36% or less, which includes all of your debt payments, including your mortgage. If you have too much debt combined, it will impact your loan eligibility.

However, keep in mind that your debt ratios aren’t the only factor mortgage lenders consider when approving you for a home loan. In particular, they look at your credit history, as well as your total income and assets.

If you need to get your debt and other monthly payments under control, explore your Debt Consolidation Loan Options By Visiting Credible to compare rates and lenders.

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Joint mortgage options if your spouse has a lot of debt

Fortunately, there are ways to get a home loan even if you are dealing with large debt. Read on to see which method is right for you.

1. Apply for a mortgage as a sole applicant

The first option is for a spouse to apply as a single applicant. If you are applying without your co-borrower, only your assets and liabilities should be taken into account. However, the downside of applying as a single person is that only your income will be considered, which can affect the purchase price of your home. Applications for shared mortgages consider the income of both applicants and you may be approved for a larger loan.

If you’re ready to apply for a mortgage for a shared home, visit Credible to get personalized mortgage rates and pre-approval letters without affecting your credit score.

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2. Explore other home loan options that allow a higher DTI

If you’ve been turned down for a mortgage program because of a spouse’s debt, that doesn’t necessarily mean you’ll be turned down for every mortgage. In fact, some types of loans allow debt-to-income ratios (DTI). In particular, you may want to consider types of government guaranteed loans, such as FHA loans, which may have more flexible qualifying standards.

That said, whatever types of home loans you are exploring, be sure to shop around. Different mortgage lenders have different rates and fees, so shopping around can help you get a lower interest rate.

To get an idea of ​​what your monthly payments would look like, check out Credible to preview your prequalified mortgage rates.

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3. Improve the overall DTI

Finally, another way to handle the situation is to settle your debts before you find your ideal shared home. If your combined debt ratio is too high right now, you can work to improve it by paying off your debt.

One way to reduce your debt is to consider a debt consolidation loan. A debt consolidation loan is a personal loan that allows you to pay off all of your existing debt and consolidate it into one single monthly payment.

You can use Credible’s personal loan calculator to find the best personal loan rate.

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Can a married couple buy a house in one person’s name?

While it’s entirely possible for a married couple to buy a house using just one person’s name, it might not be the right choice for everyone. If you decide to go this route, you will need to consider a few pros and cons.

Benefits

• You can buy a house right away: Applying as a Sole Applicant gives you the freedom to search for a home immediately. If you are striving to improve your debt ratios so that you can apply to your co-borrower, it may take some time before you seriously start looking for a home.
• You may be able to get a lower interest rate: Borrowers with higher debt ratios and lower credit scores are charged the highest rates and fees. However, if only one candidate has solid financial background, they may be able to secure a lower interest rate.

The inconvenients

• You can have a lower loan maximum: When you apply for a mortgage as a single applicant, only that person’s income will be taken into account in determining your pre-approval amount and you might be forced to look at lower selling prices as a result.

Visit a online mortgage broker like Credible to get personalized rates in three minutes and without affecting your credit score.

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