July 18, 2014
A reader asks, “We have applied for an FHA loan. We live in Texas and my husband has a qualifying score to be approved along with the income. My question is that I have prior to marriage collection accounts and my income along with my credit score cannot be used as my credit score isn’t high enough. Collection accounts are prior to marriage and we have no debt incurred during our marriage.”
“We were married in October 2012. My loan officer has stated that my debt prior to marriage will not be included with my husband’s debt to income ratio as it violates Texas state law. TX is a community property state and debt is only to be split within the time of the marriage and not prior. Is it possible that prior to marriage debt not be included for an FHA loan?”
FHA loan rules in such cases defer to state law, so the answer would like in current state law that covers issues like these. A community property state is one where, generally speaking, the debts and financial obligations incurred after the couple is legally married are shared. FHA loans in such cases may require a review of the non-borrowing spouse’s income and related factors.
That said, every community property state is different–there are no one-size-fits-all rules for community property states in these cases. For the purposes of answering this reader question, we can only refer the reader to the local authority or possibly a legal expert in community property laws. Lender standards will also play an important role in how things are handled.
If the lender’s standards are such that the non-borrowing spouse’s past debts or credit issues are not a factor, and such standards are in compliance with state or federal law, it’s possible the loan might proceed. But if lender standards or current laws on the books dictate a certain course of review for non-borrowing spouses because of community property laws, it’s possible that any past financial issues may need to be addressed for the loan to move forward.
Do you have questions about FHA home loans? Ask us in the comments section. You can get information about applying or getting pre-approved for an FHA loan at FHA.com, a private company and not a government website.
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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