How do lenders calculate interest rates for home mortgage for married couples who have different FICO scores?

Question

Especially interested in the case where there is a 50+ point differential in the FICO scores, and the spouse with the higher income has the lower score. And the combined income needs to be used as the basis for the loan amount asked for ...

Answer 1

Basically if you have two people on any mortgage loan, the bank or lender will take the lower of the two scores if it is any documentation over than Full doc.

If it's full doc, which means full tax returns, proving income for both borrowers, the bank or lender will use the middle fico score for the higher-earning borrower.

Sounds like you are in a pickle. If you absolutely need to use both borrowers, the lower fico will hurt your rate. It depends what the fico score is though. If the lower of the two ficos is 680 or above, it wont matter too much. If it's really low, 660 or less, it may be worthwhile to hold off until you improve your scores.

Otherwise you're gonna pay an arm and a leg for it now.

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Answer 2

Scott is correct but the higher of the middle score is used. There are lots of programs out there. You could use the lower paid spouse who has a higher mid score and go stated or no ratio. There is some hit to the rate but not as much as you might think. Since most states are dower states then both must be on title but not on the note. Ways around everything!
I am a mortgage banker in Tennessee

Answer 3

Unfortunately they're going to use the lower FICO score. Though if there are some negative points on the person with the lower score's report, you can try to remedy them and then get a quick adjustment score.

Answer 4

Score of the higher income earner is used to qualify. The scores can beimproved in less than a week.

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