Non-Purchasing Spouse/ Disclaiming Spouse in Community Property States:
All of the debt, except for debt obligations that are excluded by state law, the debt obligations of a Non-Purchasing Spouse also known (according to USDA) as a “Disclaiming Spouse” (Spouse’s that is not applying for the loan) must be included in the primary borrower’s qualifying ratios when the home buyer resides in a community property state or the property guaranteed is located in a community property state.
The “Disclaiming Spouse’s” credit history is not considered as a reason to deny the applicant’s loan application. However, the “Disclaiming Spouse’s” obligations will be considered in the debt-to-income ratio unless it is excluded by state law. A credit report that meets the USDA’s requirements must be pulled for the “Disclaiming spouse” in order to accurately find out whether the spouse’s debts will be counted in the total debt ratio/ calculation.
This could possibly adversely affect the primary borrower’s ability to qualify for a USDA Home Loan.
Community property states include:
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
For more information, you can contact Ted Canto directly at 480.650.8602 or email me at [email protected]
