FHA guidelines on a non-purchasing spouse are
rather confusing and unclear. They seems to hinge on if the home
is in a community property state, or not. Knowing this doesn't
always clarify the guidelines.
Does the non-purchasing spouse go on the title or not?
Why is their credit pulled if they are not on the loan or mortgage?
I get questions from all over the country on this topic and everyone
interprets it differently. We have contacted FHA for
clarification and all they do is send this excerpt from the 4155.
This I do know, what ever your interpretation of title and credit
requirements for a "non-purchasing spouse" is, the only
opinion that matters is that of the underwriter and/or the closing
instructions. So we just have to suck it up and expect confusion.
This is from the 4155
D. Non-Purchasing Spouses. If required by state law in order to perfect a valid and enforceable first lien, the non-purchasing spouse may be required to sign either the security instrument or documentation evidencing that he or she is relinquishing all rights to the property. If the non-purchasing spouse executes the security instrument for such reasons, he or she is not considered a borrower for our purposes and need not sign the loan application. In all other cases, the non-purchasing spouse is not to appear on the security instrument or otherwise take title to the property at loan settlement.
Where there are non-purchasing spouses who sign security instruments relinquishing their rights to the property pursuant to applicable state laws, these non-purchasing spouses do not have to sign the mortgage note. Signing the security instrument for such purposes does not make the non-purchasing spouse a co-borrower.
Except for the obligations specifically excluded by state law, the debts of the non-purchasing spouse must be included in the borrower’s qualifying ratios if the borrower resides in a community property state or the property to be insured is located in a community property state. Although the non-purchasing spouse's credit history is not to be considered a reason for credit denial, a credit report that complies with the requirements of paragraph 2-4 must be obtained for the non-purchasing spouse in order to determine the debt-to-income ratio.
