Buying a House Without Your Spouse in Wisconsin

One spouse has a 760 credit score and a clean file. The other is still rebuilding after a rough few years. The obvious plan is to put the stronger spouse on the mortgage alone and keep the lower score out of the pricing. In most states, that plan works about the way you would expect. In Wisconsin, it depends on which loan you choose.

This comes up a lot in the fall, when couples are trying to lock in a house before winter and one of them would rather not have their credit pulled at all. Here is how it actually works here, and where Wisconsin is different.

Can you buy a house in Wisconsin without your spouse on the loan?

Yes. Being married does not require both of you to be borrowers. One spouse can apply, qualify on their own income and credit, and sign the note alone. Lenders do this every week.

The catch is that the application only gets to use your income. If your household budget depends on both paychecks, the file can only count one of them. For some couples that is fine. For others it shrinks the price range enough that leaving a spouse off stops making sense.

Why would you leave a spouse off the mortgage?

The usual reasons are practical, not personal:

• Credit score. Pricing on most loans is driven by the borrowers' scores, so one low score can raise the cost of the whole loan. Leaving that spouse off lets the stronger score set the terms.
• Recent credit events. A spouse with a recent collection, a late payment or a short work history can complicate an otherwise simple file.
• Income structure. A spouse who just went self-employed may not have the two years of returns underwriting wants yet.

All of those are good reasons. Whether the plan saves you anything is a Wisconsin question, though.

What does Wisconsin's marital property law change?

Wisconsin is a marital property state, which is how the state handles what other states call community property. For mortgage purposes, that matters on government-backed loans.

On an FHA, VA or USDA loan in a community property state, including Wisconsin, the lender pulls the non-borrowing spouse's credit report and counts their monthly debts in your debt-to-income ratio, even though they are not on the loan. Their credit score is not used to qualify you, but their car payment and card minimums are.

On a conventional loan, that rule does not apply. Only the borrower's debts count. So a spouse with a thin score and a heavy car payment stays out of the math entirely.

That one difference often decides which loan a couple should use. If you have not looked at how lenders weigh your debts, our guide to debt-to-income ratio for a Wisconsin mortgage walks through the numbers.

How does this play out in real dollars?

Say you earn $6,000 a month before taxes and you are buying alone. The new house payment, with taxes, insurance and mortgage insurance, comes to $1,900. Your only other debt is a $400 car payment.

Same buyer, same house, same income. On the conventional loan the file is comfortable. On the FHA loan it sits near the top of what automated underwriting will usually approve, and a slightly higher tax bill or a few thousand dollars more in price could push it over.

That is why the FHA default does not always hold. FHA is often the go-to for buyers with modest credit, but if the whole point is keeping a spouse's debts out of the picture, a conventional loan with 3% to 5% down may be the better tool, as long as the buying spouse's own score supports it.

Can your spouse still be on the title?

Often, yes. Being on the title (owning the house) and being on the loan (owing the money) are separate. Many couples put both names on the deed and only one on the note. Depending on the loan and the title company, the non-borrowing spouse may still be asked to sign the mortgage document at closing.

Wisconsin also has homestead rules. On a purchase, the buyer can usually sign the purchase-money mortgage alone. A later refinance of the home you live in, though, generally needs both spouses' signatures. And under marital property law, a home bought with income earned during the marriage is generally presumed to be marital property whoever's name is on it. If ownership matters to you for estate or family reasons, spend an hour with a Wisconsin real estate attorney. That is their call, not your lender's.

The bottom line

Buying without your spouse is allowed in Wisconsin and is often the smart move. But the savings depend on the loan. On conventional financing, only your credit and your debts count. On FHA, VA and USDA, your spouse's debts come along whether they sign or not. Run both versions before you pick one, not after the credit pull.