-
NONBORROWING SPOUSE DEBT ON VA LOANS TREATED IN COMMUNITY PROPERTY STATES
I know HUD requires nonborrowing spouse’s debts to be counted on FHA home loans in community property states on FHA loans by mortgage lenders. Fannie Mae and Freddie Mac does not require NONBORROWING spouse’s debts to be counted on conventional loans on Conventional loans. What is the Veterans Administration (VA) requirements on NONBORROWING spouse’s debts on VA loans when a veteran applies for a VA LOAN? Does the NONBORROWING spouse’s debts count towards the debt to income ratio on VA loans in community property states.
-
2 Replies
-
There are 9 community property states.
-
About VA loans and nonborrowing spouses in community property states, the debts of the nonborrowing spouse may be treated differently. Here’s how the VA or the Veterans Administration (VA) usually resolves this issue:
VA Loan Considerations for Nonborrowing Spouse Debt
Community Property States:
Presumably, all marital debts incurred by either party when the couple is married, even if a single spouse is the one who takes the loan, are regarded as joint marital debts if the couple resides in any of the community property states.
Debt-to-Income Ratio (DTI):
According to the VA Guidelines, all of the veteran’s obligations must be taken into account in formulating the DTI. In contrast, about the EKVA nonborrowing spouse, the VA does not tend to require their debts to be added to the DTI computation, which is a requirement under VA loans.
Including the nonborrowing spouse’s debts may be reasonable if the debts are bound to affect the household’s finances.
Lender’s Policies:
The actual accounting of a nonborrowing spouse’s debts towards the DTI ratio affects the lender’s policies and practices. Some lenders may choose to include these debts, while others may opt to exclude them.
Spousal Income:
Where the nonborrowing spouse has income that can be substantiated, it may also be included in the final determination, which will also help if any debts included therein will be exerted against them.
To summarize, while this decision would normally not require the payment of a returning spouse’s debts, according to the DTI calculation, a VA lender may opt to include both based on their discretion and the particular financial position. As a result, if you are considering a VA loan in the future and are worried that a spouse’s debts will be evaluated differently, the best way is to contact a VA-approved lender who can answer such requests to their requirements.