To apply as co-borrowers or not?

December 27, 2012 10:57 PM

My girlfriend and I are trying to get a home loan together. She has good credit, mine is apparently less than good (we were already denied by one lender). Is it possible to apply for loans using only her name, but still include the income I would contribute? Is this a terrible idea?
posted by mumblingmynah to work & money (19 answers total)

Your best bet is to go to a mortgage broker. They will help you look at your options and they can provide some analysis before you start playing credit ping-pong and wrecking your score more. If there is a non-profit (and non-scammy) credit counselling agency in your area, that might be somewhere to go too.
posted by Chaussette and the Pussy Cats at 11:07 PM on December 27, 2012 [2 favorites]

I don't know if this is technically possible, but think about it this way, you're asking if your girlfriend should take out a major loan that she presumably would, at the least, struggle to pay back without your contribution - and yet for her to be the only one on the hook for the money. If it were her asking this question, I'd tell her that this is a huge risk and I don't think she should do it.
posted by treehorn+bunny at 11:10 PM on December 27, 2012 [23 favorites]

If she can qualify for the loan on only her income and credit score, it is possible for you both to be on the house title. If you guys plan to be together for the foreseeable future, this can work but please insist on signing a legally-enforceable cohabitation agreement. It's for her good, giving her expedient financial rescourse to get back what she put in (down payment?) if things don't work out. Since she's on the hook for the debt it's only considerate to acknowledge her larger risk and ameliorate as much as possible.

Did this for four years, happily married now. Marriage was the objective from the get go, though, YMMV.
posted by SakuraK at 11:32 PM on December 27, 2012 [5 favorites]

If it were her asking this question...

But she's not - the BF is.

It's not a 'terrible' idea - many, many home buyers do exactly this. And, usually on the advice of a seasoned mortgage broker. If it's on her credit and salary, she would only qualify for a loan commensurate with her salary alone (so as not to risk financial hardship on her).
posted by Kruger5 at 3:22 AM on December 28, 2012

It's a terrible idea for your girlfriend, but a good idea for you. She gets all the responsibility of a mortgage, and you get partial home ownership as long as you want it.
posted by winna at 3:29 AM on December 28, 2012 [5 favorites]

Is it possible to apply for loans using only her name, but still include the income I would contribute?

Not really, no. The whole point of checking credit is for the bank to answer the question: "How likely is it for the person responsible for paying me back to do so?" If your income is necessary for the two of you to cover they payments, then your credit is relevant to the bank. You can try to get a loan based on her income alone, if sufficient, or you can try and find a lender willing to work with you --- checking with a broker's a good suggestion, and if you're a first time buyer there may be some programs to help you out.
posted by Diablevert at 3:33 AM on December 28, 2012 [2 favorites]

I just did the buy it with out your income listed option. I would recommend it highly since she can get a mortgage dirt cheap right now with excellent credit. Both of you can contribute to the house or split the bills evenly. My wife has bad credit, not her fault, long story. I have excellent credit, thank you mom and dad. I qualified for the loan under my resources only and while it would be tight to live on them alone, I could do it. Obviously I do not plan on it, but it allowed me to get one amazingly cheap mortgage through a half way decent lender. Me-mail me for all of the gritty details.
posted by Nackt at 4:17 AM on December 28, 2012 [1 favorite]

These days, lenders are checking paperwork extremely thoroughly, so they would not consider your salary at all if you are not a borrower. You could not just write down that extra income - they are going to demand paystubs and checking account records. They will require that every source of income be documented, and I don't think they will accept "my boyfriend will pay half" as income, unless you are a coborrower.

Best bet is to work with a mortgage broker who can help you beef up your credit and find a loan for you.
posted by yarly at 4:20 AM on December 28, 2012

Doubling on the mortgage broker for this question; they deal with multiple lenders; banks and credit unions are singulars.
posted by buzzman at 4:43 AM on December 28, 2012

technically that's fine, but I would really make sure you two have some legally binding documents concerning the home ownership and what happens if you two break up. I've known a few couples where this becomes one hell of a situation because they were never married.
posted by zombieApoc at 6:39 AM on December 28, 2012

Just be aware that I know a woman who dated a guy, and pretended to love him, for several years, got him to pay a significant amount of a house deposit that was totally in her name, and then broke up with him in such a way that he had no recourse (I don't want to go into the details, but it wasn't pretty what she did to him); she basically stole the house from him. So if you're gonna do this, make sure you really, really trust your girlfriend.
posted by windykites at 6:44 AM on December 28, 2012

She has good credit, mine is apparently less than good (we were already denied by one lender).

So wait. You don't know your credit score? Did you expect to have good credit? Go pull your free reports and check them for errors. This might even be a non-issue if you've got some things you can easily fix.

I'd also consider all the various scenarios that could leave either one of you in a real lurch with out being married or having a nearly equally strong legal framework in place. What if she looses her job, you pay a significant portion into the equity, then you break up? You'd have nothing to show for it. Or what if one of you dies?
posted by fontophilic at 7:30 AM on December 28, 2012 [2 favorites]

IAAL, IANYL, TINLA.

Is it possible to apply for loans using only her name, but still include the income I would contribute?

No. In light of the economic unpleasantness of the last few years, the days of the liar's loan are over. Credit will only be extended based upon the income and creditworthiness of the borrower. If you're not borrowing, your income is no more relevant to the transaction than mine is.

Is this a terrible idea?

For girlfriend, yes. For you this is awesome because you get to live in a house with zero liability. The situation that will eventually happen is that she will by the house by herself based on her income and with her name being the only grantee on the deed. You will become her month-to-month tenant.
posted by Tanizaki at 8:20 AM on December 28, 2012

Is it possible to apply for loans using only her name, but still include the income I would contribute?

As mentioned above, no.

Is this a terrible idea?
Ideally she would not acquire property that she can't afford without your contribution, anyway, but many people chose to do so. I don't know if this is a terrible idea for you/her, but it would be a terrible idea for me.

Better idea would be to figure out what's wrong with your credit and fix it, if possible.
posted by sm1tten at 8:43 AM on December 28, 2012

I did this with my husband, who was my boyfriend at the time. I had the superb credit and he had all the money and the VA loan eligibility.

My boyfriend had a lot of bad credit for failing to pay his school loans and credit cards while he was enlisted in the military. Also, I think he knew very little about credit responsibilities at the time, which contributed to the neglect.

But, you know what? He fixed his mistakes. After he got out of the military and we got together, he wanted to buy a house and was serious about it. He took many steps to better understand his credit report and improve his credit score. He got his credit reports from all 3 credit agencies, and fixed many things on them. His credit was so low that he wasn't even eligible for a credit card. So he got a pre-paid credit card and started building his credit score. Eventually, he was able to upgrade to a real credit card, which boosted his credit even more.

As a result of his improved credit score, we ended up with a lower interest rate on our joint mortgage, which reduced our monthly payments by a significant amount.

Now, it sounds like you want to take the easy way out and use your girlfriend's credit. But why are you in such a rush to buy a house right now? Sure, interest rates are low in the U.S., but the federal reserve said that they're going to keep them low at least until unemployment rate goes down to 6.5%, or at least until mid-2015, which is quite aways from now. This will give you ample time to get your act together and fix your credit report.

Look, your credit isn't going to bite you. You've made mistakes in the past, you recognize them, and now it's time to go back and fix them. Think how great will it feel to no longer have that ill-feeling in your stomach every time someone does a credit check on you.
posted by nikkorizz at 9:13 AM on December 28, 2012 [2 favorites]

I was also in a similar situation like nikkorizz said - but my boyfriend just didn't have a lot of credit history and a few marks, and my credit was.. crowded, but good. Buying a home together in 2007 immediately, immensely helped his credit. Is there *any* loan you can qualify for with your girlfriend?
posted by getawaysticks at 8:13 PM on December 28, 2012

There's some legal danger for your girlfriend if her name is the only one on the contracts. She needs to be willing to take on full responsibility should something happen in your relationship.
posted by jander03 at 7:54 PM on December 29, 2012

My husband and I just went through this (we got married just a few weeks before our short sale closed). We were not able to get a loan using both of our incomes unless we were both on the loan. We went through several different types of lenders, too, and this was true at all of them.

HOWEVER, at the lender we wound up with, they lent to us even though my credit is not good. As long as my husband's stayed solid and mine was not below 590, we could get a loan there at a good interest rate. So I would bring that possibilty up when shopping for lenders and see what they say.

Alternately, you can spend a year working on improving that credit score. No gaurantees that that will actually work, though. Credit scores can be a bit unpredictable.
posted by wansac at 2:47 PM on December 30, 2012

This is a perfectly fine thing to do as long as you go to a lawyer and draw up a separate contract about home ownership.
posted by Tooty McTootsalot at 8:02 PM on December 30, 2012