How to Get a Joint Mortgage With One Bad Credit: Tips for Couples

The short answer is yes, but the journey may be more complex. Lenders rely on your credit report and scores to determine your financial reliability for a mortgage loan. A poor credit score often signals a higher risk, which can result in higher interest rates or possibly rejection.

In addition to your credit report, many lenders also look at:

• Income (stable for two or more years)
• Debt-to-income ratio
• A down payment

How does a borrower’s credit score affect the mortgage loan process?

• Minimum Credit Score: Most conventional loans require a score of 620 or higher, but some programs, like Federal Housing Administration (FHA) loans, accept scores as low as 580 with larger down payments.
• Impact on Loan Terms: Poor credit can lead to higher interest rates, increasing monthly payments.

However, there are ways to buy a home, even when one spouse has bad credit. Non-traditional lending programs, such as hard money loans, alternative financing options, or government-backed loans can help.

Can You Get a Joint Mortgage with Bad Credit?

Applying for a joint mortgage means that the mortgage and house will be in both of your names; you will both own the house equally. You will also both owe the monthly payments to your mortgage lender.

Getting a joint mortgage when one spouse has bad credit is possible but requires understanding how lenders evaluate applicants. Whoever reviews your application will need to look at both spouses’ financial and payment history together. Lenders typically consider the lowest credit score between spouses when assessing risk.

While a joint mortgage application increases borrowing power by combining incomes and splitting financial responsibility, having bad credit may trigger a larger down payment requirement and higher interest rates.

However, just because one spouse has bad credit doesn’t mean that filing for a joint mortgage isn’t an option! You just need to carefully consider why you are applying for a joint mortgage and what you can do to help your application. You can also take the time to improve the low score in question.

When navigating this scenario, you have several paths.

1. Apply for a Mortgage Individually

Your lender may suggest you apply alone if you can obtain the loan you need without your spouse if they have bad credit, even if they have a high income, to help your application. If the spouse with a lower income but a good credit score qualifies for the loan independently, this can save you from high interest rates. However, it limits borrowing power to one income.

Remember that the mortgage names show who is responsible for paying back the home loan. Just because one spouse isn’t on the mortgage doesn’t mean they don’t own the home. The title of the home can still have both of your names on it—both names can be on the title without both being on the mortgage.

Before applying alone, make sure you have considered what your application would look like with and without the other’s financial support.

2. Use a Co-Signer

A co-signer with strong credit can strengthen your application, though they will share responsibility for the loan if payments are missed.

3. Increase Your Down Payment

A larger down payment reduces lender risk and could be a good option.

4. Opt for an Adjustable-Rate Mortgage (ARM)

Adjustable rate mortgages often come with lower initial rates. You can work on your credit rating and refinance it to fixed mortgage loan options for a better rate when it starts adjusting.

5. Build Your Spouse’s Credit

There are many ways you can quickly boost your score or your spouse’s score with the credit bureau and improve your joint financial future as well. Here are some things you can do to improve a credit score:

• Check for common mistakes. Some errors may be affecting the credit score.
• Lower your credit utilization ratio. Work to get the credit utilization ratio ideally under 10%.
• Add your spouse as an authorized user. Allow them to benefit from your responsible credit utilization.
• Pay your bills on time. This is one of the most essential parts of a credit score, so make sure you and your spouse pay on time.

6. Consider Alternative Lenders

The Associates Home Loan of Florida, Inc. specializes in alternative financing and challenged-credit home loans, offering flexible terms for couples with credit challenges. One of our mortgage professionals can match you with lenders specializing in bad credit mortgages. Programs like FHA loans are designed for borrowers with lower credit scores. Additionally, VA loans and USDA loans cater to specific needs and may not require high credit scores.

At Associates Home Loan, we specialize in assisting families with unique credit challenges and offer alternative loan options, including subprime loans, hard money loans, and FHA and VA loans. Our team is here to help you secure the best possible mortgage, whether through a government-backed program, a conventional loan, or alternative financing.

• Flexible Options: We offer solutions tailored to your credit situation.
• Expert Advice: Our specialists simplify the homebuying process.
• Accessible Resources: Learn about all your options, including bad credit home loans, through our website.

Buying a home with one spouse having bad credit may seem daunting, but it’s entirely achievable with the right strategies and support. Whether you’re looking to improve your spouse’s credit scores, explore alternative lending options, or understand government-backed mortgage programs well, Associates Home Loan is here to help.

Contact us today—submit a loan application to see what you qualify for!