Getting A Mortgage In Community Property States

What is a community property state?

In the U.S., nine states have tried to alleviate the pressure of divorce by passing community property laws.

In Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, community property laws require divorcing couples to split assets acquired during a marriage equally. Marital property includes earnings, all property bought with those earnings, and all debts accrued during the marriage.

When getting a mortgage in a Community Property State, a spouse might not be on the new mortgage but their credit report will still be pulled and their debts will be added to the debt-to-income ratios of the mortgage borrower. However, this only applies to FHA & VA mortgages taken in the above states, not on Conventional loans.

So if a borrower is in the process of separation or is separated but not legally divorced yet, the debts of their soon to be ex-spouse will be counted against them when buying a new property and applying for an FHA or VA mortgage.

Getting a mortgage during a separation and/or divorce can be tricky. Always make sure to talk to an experienced mortgage lender to know all the ins and outs of financing during a marital separation.