When applying for VA home loans, your financial situation plays a major role in determining your eligibility. But what about your spouse’s financial history? If you’re purchasing a home as a married couple, your lender may consider your spouse’s debts in the qualification process. Understanding how spousal debt impacts your VA loan application can help you plan ahead and avoid unexpected roadblocks.
How Lenders Evaluate Debt in VA Home Loans
VA lenders assess financial risk by reviewing a borrower’s debt-to-income ratio (DTI)—the percentage of monthly income that goes toward debt payments. Most lenders prefer to see a DTI of 41% or lower.
If you’re applying for a VA loan jointly with your spouse, their debts could be factored into the DTI calculation. This includes credit card balances, car loans, student loans, and other recurring obligations. Even if your spouse isn’t listed as a co-borrower, some lenders may still consider their debts when evaluating household financial stability.
When Spousal Debt May Affect Your Loan Application
Not every borrower will be impacted by a spouse’s debt. Every situation is different. That being said, here are some important factors that could come into play:
- Community Property States – If you live in a community property state, lenders are required to consider your spouse’s debts even if they aren’t on the loan. These states include Arizona, California, Texas, and others.
- Co-Borrowing vs. Individual Application – If your spouse is applying as a co-borrower, both sources of income and debts will be reviewed by your lender. This can be beneficial if your spouse has a strong income and credit history.
- Credit Score Requirements – While VA loans don’t have a set minimum credit score, lenders may look at your spouse’s credit history if they are a co-borrower.
Managing Spousal Debt to Improve Loan Eligibility
If your spouse’s debt is affecting your ability to qualify for VA home loans, there are steps you can take to improve your financial standing:
- Pay Down Existing Debt – Reducing credit card balances and loan payments can lower your DTI ratio.
- Consider Applying Individually – If your income is sufficient, applying without a co-borrower may help.
- Work on Credit Improvement – Making timely payments and lowering outstanding balances can strengthen your application.
Let’s Find the Right VA Loan Option for You
Navigating the VA loan process can be challenging, especially when considering spousal debt. At Mortgage Solutions Financial, we’re here to help veterans and military families find the best path to homeownership. If you have questions about how spousal debt affects VA home loans, contact us today. We’ll guide you through the process and help you explore your options.
