In Colorado, if loan is only in my name, does FHA count my spouse's debt as mine?

Asked by Cs, Denver, CO Mon Mar 31, 2008

Colorado is a marital property state, is that the same as a community property state for FHA's purposes? We'd like to get an FHA loan in my name only, but I don't know if my spouse's debt will be counted in the debt-to-income ratio.

Does it make a difference if we file our taxes jointly or separately? Is it better to have filed separately if we're trying to get a loan in my name only?

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Corey Grushin, Agent, East Brunswick, NJ
Wed Apr 9, 2008
Dear Cs as you are self employed your income will be the amount you paid taxes on for the last 2 years average out over 24 months. Filing jointly or single won't make a difference. The car lease payment will be figured into your debt ratios. An FHA approved underwriter can ask for a credit report for your spouse but the debts will not be included in your ratios. The underwriter may not ask for a credit report as well.
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Jamie Kimbro…, , Castle Rock, CO
Wed Apr 9, 2008
Hi again - You really should have a qualified lender/underwriter do a pre-approval for you. They will look at the past 2 years tax returns, plus probably ask you for a year-to-date P & L. Probably will want bank statements, too. That will help you so that you are not agonizig anymore and a good lender can help you with a plan if now is not the time! Good luck!
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Merritt Noel, , Denver, CO
Wed Apr 9, 2008
Hi CS,

FHA will require full copies of last 2 years tax returns and all supporting schedules. Income is calculated by using a 2 year average of Schedule C line 31 (carries through to 1st page of 1040). If you are SE less than 2 years, simply divide documentable SE income by 24 months. I guess my question to you is when you pay yourself are you W-2?

As to filing jointly and you be the sole individual on the loan, you should be fine but I will speak to my underwriter tomorrow and get a definitive answer for you.
Web Reference:  http://www.almortgageinc.com
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Cs, Home Buyer, Denver, CO
Wed Apr 9, 2008
Original poster here... I actually am self-employed (commissioned independent contractor, not a registered business or LLC). Does that change things for the tax return issue? This would be our first year married and filing jointly. I want to make sure we're not screwing ourselves by filing our taxes "wrong"-- we're already kicking ourselves a bit for being so agressive with past deductions that'll make my income look a lot lower to a lender. They average the last two years for self-employed, right?

The reason we'd be getting the loan in my name only is because 99% of our income comes from one company and that paycheck is issued in my name. So on paper, my spouse is basically no income but is extra debt (student loan, etc). The only joint debt we have is a car lease that's about to end in the fall.
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Jamie Kimbro…, , Castle Rock, CO
Wed Apr 9, 2008
FHA usually only requires your paystubs and W-2's to qualify. The only time they would typically require tax returns would be if you are self-employed or commissioned.

You would need to speak to a qualified FHA lender to determine your course of action. I would strongly recommend that you do that before house-hunting. That also allows you to have a lender letter in-hand and puts you in a stronger position when making an offer.
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Merritt Noel, , Denver, CO
Tue Apr 8, 2008
Hi CS,

Yes, marital property state is the same as a community property state. When it comes to determining debt-to-income ratio, a lender will only take into account what you have reporting on your credit report. So as long as you are not a co-signer on your spouse's debt it will not be counted.

It does not make a difference if you file your taxes jointly or separately as a lender will use your current pay-stubs and W-2s to verify income. If you would like to discuss a FHA product in more detail, I would be happy to help. FHA loans are in my opinion are the best products on the market today. Minimum down-payment required, low monthly mortgage insurance factor and the best interest rates on the market. Happy House Hunting!!
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Jamie Kimbro…, , Castle Rock, CO
Mon Mar 31, 2008
Hi - for a loan in your name only, only joint debt would be counted against your debt-to-income ratio. So, if you signed for a credit card or car, etc., with your spouse, it would count.
FHA is a great way to go now - low downpayment and more lenient ratios. If you have not talked to a lender yet, I know some great ones! ANd, if you need representation in finding and buying that new home, I would be happy to help! Good luck in your new home purchase.
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Jeff Boyce, , Denver, CO
Mon Mar 31, 2008
Hi,

The only way they will count your spouses debt, is if you and your husband have "joint" accts you share. In Colorado, they will simply pull your credit and use what accts are listed there as yours only. I assume he has a credit issue or another specific reason to keep him off - right?

You will need to qualify on your debt ratios on your own - are you aware of how that works here when purchasing a home? Also, it's important to find out what type of loan you'd like to get - have you got going on doing a Pre-Approval yet?

Jeff Boyce
Metro Brokers - Colorado Homes and Mortgage Specialists
Web Reference:  http://www.JeffBoyce.net
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