September 21, 2017
Do I need the consent of my non-borrowing spouse to get an FHA mortgage? That’s an important question, and the answer varies depending on the laws of your state.
The rules governing this issue are found in the FHA loan handbook, HUD 4000.1. The section answering this question is short, but the implications will vary, again, depending on state law. But why?
FHA home loans and other major lines of credit are often affected by state laws, including what are known as “community property laws”. If you reside in a community property state, that means that state law dictates how the debts incurred in a legal marriage are viewed legally.
In community property states, spouses share the financial responsibility for all debts incurred for the duration of the legal marriage. If there is a divorce, community property laws would dictate how those financial obligations are to be split between the two people.
As all of the above implies, community property laws may, depending on the state, also require certain actions in a home loan transaction that either satisfies the law or provides an “out” for the non-borrowing spouse so as to not financially obligate someone who isn’t a consenting party to the mortgage.
HUD 4000.1, page 136, addresses this issue as follows:
“If necessary to perfect a valid first lien under state law, the Mortgagee must require a non-borrowing spouse to execute either the security instrument or documentation indicating that they are relinquishing all rights to the Property.”
From the above, we learn that the non-borrowing spouse can either choose to become financially obligated or sign away any claim to the property. There are no exceptions noted in this portion of the FHA loan rule book. That means in community property states, the spouse must choose to become obligated or give up any legal claim to the home.
Community property laws are not standardized, and not all states have them. Borrowers who need to know how community property law can affect the outcome of their FHA mortgage loan application will need to either look up the state law for themselves or consult a legal expert who can advise the borrower.
Your participating FHA lender may also have some advice for you based on past experience and known legal precedents, but any information you get from such sources (including us) should not be mistaken for legal advice.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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