If the property is located in a community property state
VA requires consideration of the spouse’s credit (whether or not the spouse will be personally liable on the note and whether or not the applicant and spouse choose to have the spouse’s income considered). Individual debts on a non-borrowing spouse’s credit report must be considered in the DTI. Any outstanding judgments on the non-borrowing spouse’s credit report must be satisfied as well.
If a married veteran wants to obtain the loan in his or her name only, the veteran may do so without regard to the spouse’s credit only in a non-community property state.
The Underwriter is responsible for thoroughly analyzing and evaluating the spouse’s credit in terms of recent derogatory accounts as they relate to the subject loan transaction. A letter of explanation is required for all of the spouse’s derogatory accounts.
Topic Date: 5/8/14