If my husband and I was to apply for a USDA Rural Development Program, would I have to be on the loan, meaning, have my credit ran too?

Asked by Cheri Nelson, Sacramento, CA Tue Nov 8, 2011

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Annette Levi…, , New York, NY
Tue Nov 8, 2011
Cheri, If you both apply then both credit reports are used. If you are not on the loan your income is still taken into consideration on a USDA mortgage.
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, ,
Tue Nov 8, 2011
No one *has* to be on the loan unless their income is needed to qualify.

However in a community property state, such as us here in California, even if the spouse of the borrower would not be on the loan, the "non-borrowing spouse's" credit does need to be checked when a government (FHA, VA as well as USDA) loan is being done. The reason being is to include the non-borrowing spouse's debt payments into the borrowers debt to income ratio. Meaning if you have a credit card payment (or car loan, or student loan, etc.) only in your name, that would be included in your husband's debts when calculating how much he can qualify for.

If you ask HUD, VA or USDA - they'll say that is all the credit report is checked for. However lenders are free to take it one (or more) steps further, and that is what a lot are doing. They are also reviewing the non-borrowing spouse's credit to make sure that there isn't any major derogatory items such as a foreclosure, bankruptcy or short sale - and some lenders even care if there are tax liens & judgments too. If your credit is fine and doesn't have any of that, then nothing to worry about... but if any of that exists then you should definitely ask the loan officer what the purpose of them checking your credit would be.
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