The VA Guideline Detail About a Spouse's Credit That David Never Heard
David found out something about his wife's credit history that nobody told him when he started shopping for a home near Beaufort. It is written in the VA guideline, and most buyers never hear it. David is a fictional Veteran I use to illustrate a situation that comes up often, but the rule he runs into is real.
A spouse who will not be on the loan
David lives near NAVSUPPFAC Beaufort, SC. His wife will not be on the loan, and he is unsure what a lender may ask about her. Will they pull her credit? Will they ask about her paycheck? Without answers, a buyer tends to either hand over too much or dread the conversation altogether.
What the guideline says about her credit history
The VA guideline speaks to this directly. It says: "The non-purchasing spouse's (NPS) credit history does not need to be considered; however, the NPS' liabilities must be considered to determine the extent of the household liabilities."
That sentence has two halves. The first half says her credit history does not need to be considered. The second half says her liabilities must be considered. In plain terms, the lender is not required to weigh her credit history, but the file does need to reflect what the household owes. Her debts are part of that picture.
Most buyers get this wrong in one of two directions. Some assume her entire credit file is on the table. Others assume that because she is not on the loan, she does not appear in the file at all. Neither is what the guideline says.
What the guideline says about her income
Income is a separate question. The guideline ties it to the Equal Credit Opportunity Act (ECOA) and tells lenders not to ask questions about the income of the borrower's spouse unless one of the listed reasons applies. Those reasons are that the spouse will be contractually liable, that the borrower is relying on the spouse's income to qualify, that the borrower is relying on alimony, child support or separate maintenance payments from the spouse or former spouse, or that the borrower resides and/or the property is in a community property state.
So a question about her income should trace back to one of those reasons. If it does not, that is worth asking about politely.
The words David uses
This is the part you can use today. David says:
"My spouse will not be on the loan. Under the VA guideline, Chapter 4, Topic 2, Subsection c, which questions about my spouse do you need answered, and which of the listed reasons applies?"
Then he follows up with one more question:
"Where does the guideline require the non-purchasing spouse's credit history to be considered?"
Why asking this way works
It is not an argument. You are simply asking the lender to connect each question to the text. A lender who knows the guideline can answer quickly, and you leave the call knowing why each question was asked. Some questions will be perfectly reasonable, such as ones about her liabilities, and you will be ready for them.
Individual lenders can also have their own requirements on top of the guideline, which is another reason to ask for the reason behind a request instead of guessing.
What to do today
First, write down the liabilities that belong to your spouse, so you are not surprised when the household picture comes up. Second, save the two questions above on your phone. Third, ask them at the start of your next lender conversation, before you start sending documents.
If you are a Veteran and your spouse will not be on the loan, I would be glad to walk through this with you. I am Jason Sharon, and my job is to find the path. Call me at 843-LOW-RATE.
Home Loans Inc - Jason Sharon, Mortgage Broker. Company NMLS #1728740, Jason Sharon NMLS #1281448. Equal Housing Opportunity.
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