Recently, I received an email, asking if you can buy a house without your spouse. It is a simple question, but the answer is far from straightforward. There are so many variables in this situation; I thought the best thing to do was answer here on the site. So:
Can You Buy A House Without Your Spouse? Unless you’re doing so to commit fraud, legally there’s nothing to stop you buying a home without your spouse. In some cases, it can even be financially beneficial for you both. However, the pros and cons and how complicated this can be differs, depending on your particular circumstances.
Where you live, whether you are buying with a mortgage or with cash, and your financial needs will all have an impact. Let me tell you how.
How Does Where I Live Impact Buying A House Without My Spouse?
It is not just the reason for which one spouse might buy a home without the other that has an impact on the process. It also depends on where you live.
Common Law Property States
The majority of states in the US are common law property states. This means that any property acquired by one half of the couple is theirs and theirs alone. So, for example, if you were to use $5 from your salary to buy a lottery ticket, and you won $25million, that money would belong to you, not you and your spouse. Then, anything you purchased with the winnings would also be yours including any homes.
If you buy a house without your spouse in a common law property state there are three possibilities:
- You purchase using 100% of your own money, and the property is 100% yours
- One spouse buys the home and then chooses to place the other spouse on the title, in which case it becomes joint property
- You purchase using a mix of your own money, and that of your spouse and the property is owned by you both. If you each contribute 50% of the money and each own 50% of the home. If you and your spouse contribute 30% & 70 %, then you own 30% & 70% of the home respectively, and so on.
In the case of separation or divorce, this does not mean that you automatically leave the partnership with everything you own. Consequently, in some common property law states, when a spouse is making a solo house purchase, the “nonpurchasing spouse” may be required to sign a Quitclaim Deed, relinquishing their rights to the property. This is to prevent one spouse from secretly buying a property with the intent of removing or hiding assets from the marriage.
So, all other things being equal and straightforward:
- In some common law property states, you do not have to let your spouse know you are buying a home without them.
- In other common law property states you can buy a house without your spouse but, in order to prevent you secreting assets, they must sign a Quitclaim Deed to relinquish any rights to the property.
Community Property States
If you live in a community property state, things are a little different. Anything owned by each spouse before they marry is considered separate property, and they are free to do with it what they wish. Everything obtained during the marriage is “Community Property” and belongs to both members of the couple, equally. This applies to salaries, anything purchased, inherited or gifted, and debts.
If the couple separate, with the intention of obtaining a divorce the property, or debts they acquire after the point of separation are theirs alone.
If you attempt to buy a property in your name alone, in a community property state, your spouse will have to sign a Quitclaim deed which identifies them as the grantor and you as the grantee.
Community property law states are:
- New Mexico
So, all other things being equal and straightforward:
- You can buy a house without involving your spouse in the process, in a community property state but it will automatically become an asset of the marriage, and belong to both of you.
- The exception to this marital property designation would be if you made a solo purchase and your spouse signed a Quitclaim Deed to relinquish any rights to the property.
There are other ways in which living in a community property state vs. a common law property state might affect buying a house without your spouse, and I’ll highlight those as we go along.
For What Reasons Might Buy A House Without Your Spouse?
The reason why you might want to buy a house without your spouse will dictate whether this would be a positive move or one which will have negative impacts. It will also decide whether you would have to tell your spouse you were buying a house without them, or whether or not you could do so without their knowledge.
One Spouse Has A High Debt To Income Ratio
When assessing your mortgage application, the lender will look at how much income you have, alongside your outstanding debt. This is your debt to income ratio, and if it is too high, your application will be turned down. Therefore if one spouse has a high debt to income ratio while the other has a much lower one, it can make sense to buy a house without your spouse.
The exception to this is if you are applying for a government-backed loan in community property states. In this case, your spouse’s debt will still count in your debt to income ratio.
To Save Money On The Mortgage Interest
In 1981 the Fair Isaac Corporation introduced the first credit risk scores and your “FICO®” score is one of the criteria used by lenders to decide:
- Whether to extend you a loan at all.
- How much to lend you
- The interest rate you will be charged
- Other terms such as the length of the loan
A study by the Federal Reserve discovered that of the 600,000 loans they randomly chose to review, 210,000 borrows could have paid less interest by having the buyer with the best FICO® score apply for the mortgage alone, without their spouse.
So, for example, in the case of a couple where one has a FICO score of 699, and the other has a score of 700, they could save, on average $500 in loan fees for every $100,000 they borrowed
One Spouse Doesn’t Meet Documentation Requirements
When you apply for a mortgage you will, generally speaking, need two years of tax returns, two years of W2’s and two months of bank statements. Your lender may ask for further documentation, but this is the minimum standard required by most.
If one spouse doesn’t have all of this documentation, for example, if they have only been working for a year or recently started their own business and only have one year of returns, it might make sense for the other spouse to apply as a sole applicant.
Of course, the disadvantage of only one of you applying for a loan is that you qualify for a much smaller mortgage than you would with both incomes and this would impact the size, type, or location, etc. of home you were able to afford.
To Preserve Assets
Although this one is not cut and dried, in some cases buying a house without your spouse may shelter it from being licensed or confiscated. So, if your spouse owes money in unpaid taxes, student loans, or other debts incurred during the marriage, and you own a home as a couple, that property could be at risk. To ensure the house, you plan to purchase is safe from asset confiscation you may want to consider buying the family abode without your spouse.
This also applies if you are buying the house with money that was solely yours before the marriage.
For Estate Planning
A home purchased in the name of just one spouse can make estate planning easier for some people. This is especially true if one, or both spouse have had previous marriages and have children to whom they may wish to leave a home. Being the sole owner heads off any possible complications of having to untangle your current spouse’s rights to the property.
To Avoid Divorce Battles
If you find yourself on shaky marital ground, you might want to purchase a home of your own or ensure you maintain sole control of the property by holding it in your name only.
This is only an advantage in those states that have common law property on in the case where you have your spouse sign a Quitclaim Deed.
A couple may choose to keep their finances completely separate, even after marriage, one spouse might decide to buy a home as a surprise gift, or it may be that the plan to buy a house without a spouse is rooted in deceit. In these, and other situations you will be able to buy a house without your spouses’ active participation in the process, but it would be tricky to buy with a mortgage, without their knowledge.
Cash Makes It Easier
Of course, if you are buying with cash, things are a lot more straightforward. A lender in the process can complicate things, especially around whose name is on the mortgage, and title, and who has rights and responsibilities over the property.
Other things to know about when one spouse has a mortgage:
- The lender will not usually approve the second spouse being on the title. This is because the non-borrower spouse would then have ownership rights but no responsibility for the loan repayments. As a consequence, if you are not on the title, your spouse can sell the property without your knowledge or consent, and they can also bequeath the home to anyone they wish, without your agreement.
- The majority of mortgages have an “acceleration clause” which means that if the mortgage holder dies, the balance of the loan becomes due. However, legislation is in place to protect the remaining spouse regardless of their ability to repay the loan.
- When only one spouse is on the mortgage, that spouse can borrow against the equity of the property without the permission or knowledge of the other spouse.
If a couple chooses to purchase a home with only one of them on the mortgage, it is possible, once the debt is paid off, to add the second spouse to the title. The same is true if you refinance at a later date and both spouses are then on the new mortgage.
You can buy a house without your spouse but whether or not you have to tell them will depend on the state in which you live, the reason you are making a solo purchase and whether or not you are applying for a mortgage.