January 9, 2015
A reader asks, “My husband and I live in Texas and want to buy a home. My husband makes around $40,000 a year and has decent credit. I am self employed so my tax return shows I only make around 25,000 a year after deductions. All of the debts are in my name and I have the better credit score. My question is, wouldn’t it be better to put the home loan in his name only being that he has no debt? Can we get an FHA loan in his name only?”
It’s true that FHA loan rules differ for self-employed borrowers. You may be required to furnish additional documentation along with the usual FHA loan paperwork–profit and loss statements, business tax documents, anything that can show the borrower has dependable income from the business and that the income is likely to continue.
The reader’s question about who should apply for the loan in this circumstance depends greatly on one important factor–community property laws or the lack of community property laws in the state where the home is to be purchased.
The borrower may find that community property laws (which govern the debts incurred by spouses who are legally married where such laws apply) can affect the way the loan transaction is carried out.
No two states have exactly the same community property laws, so it may be necessary to speak with a lender to see what is possible under these circumstances. In some cases legal counsel may be needed, though that might not be the case here, some borrowers feel more comfortable knowing exactly what the law permits and what it requires for a major credit transaction such as a home loan.
Bottom line, the reader will need to consult a lender or legal expert in state marriage laws to learn what is possible and what isn’t.
Do you have questions about FHA home loans? Ask us in the comments section. You can also follow us on Facebook.
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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