One question that often comes up is whether only one spouse can be obligated on an FHA loan? The short answer is yes, one spouse can be obligated on an FHA loan as long as they have ownership of the property and meet other requirements put in place by the Federal Housing Administration.
The FHA requires that borrowers have three and a half percent equity in the home, which means that if two spouses are obtaining the loan, there must be evidence that each spouse has at least 3.5 percent of the equity in their name. Additionally, both the borrower and co-borrower must be listed on the deed for the home in order for the FHA to approve the loan. In the case of a single borrower, they must still meet this requirement and show evidence that they own the majority of the equity in the home.
If the spouses are married, but only one of them is listed as the borrower, then the spouse not listed can still be obligated on the loan. This means that their income and assets will still be taken into account during the underwriting process, and they must sign the loan documents. This will ensure that each spouse is held legally responsible for repaying the loan.
The FHA also requires that any loan applicant has proof of income, which will typically be provided through tax records, pay stubs, and/or bank statements. If the spouses are both employed, then a lender will take the highest combined source of income into account when determining the maximum amount a loan can be issued for.
In summary, one spouse can be obligated on an FHA loan as long as they have ownership of the property and meet other FHA requirements as stated above. It is important to note that even if only one spouse is listed as the borrower, the spouse not listed on the loan can still be held legally responsible for repaying it and must provide evidence of income in order for the loan to be approved.
This article was contributed on Oct 18, 2023