Real Estate

Wait for spouse to be done school before buying?

  • Last Updated:
  • Oct 12th, 2020 8:01 pm
[OP]
Jr. Member
Dec 14, 2005
161 posts
36 upvotes

Wait for spouse to be done school before buying?

Looking at buying a property around $850K, have around $200K saved for downpayment. Currently making roughly $130K.

My spouse is in school with no income but will be done at the end of this year and already has a job lined up for the new year making roughly $45K. They also have roughly $15K in student loans that they should be able to pay off within 2-3 months using some existing savings. We both have good credit scores of roughly 800.

The plan is for both of us to sign for the home and mortgage.

Would putting my spouse on the mortgage application along with me while they are in school compromise our chances at good rates?

How long after my spouse has started working and making money should we wait until we can apply for a mortgage where our combined income can be considered?

Is it best for my spouse to pay off their student loan entirely before applying for a mortgage with me?

Basically at what point should be apply to have the best chance at getting the most favorable rates for our mortgage?
2 replies
Deal Guru
Feb 29, 2008
12569 posts
7798 upvotes
Would wait. "job lined up" doesn't register with me. That opportunity isn't guaranteed. Wait for your wife to start working first.
Jr. Member
User avatar
Jun 3, 2019
172 posts
137 upvotes
GTA
pricerror wrote: Looking at buying a property around $850K, have around $200K saved for downpayment. Currently making roughly $130K.

Would putting my spouse on the mortgage application along with me while they are in school compromise our chances at good rates?

How long after my spouse has started working and making money should we wait until we can apply for a mortgage where our combined income can be considered?

Is it best for my spouse to pay off their student loan entirely before applying for a mortgage with me?

Basically at what point should be apply to have the best chance at getting the most favorable rates for our mortgage?
Putting your spouse, who currently has no income, onto the mortgage application adds no value and does not help in terms of a better rate. It actually hurts the application's TDS (total debt service) due to the student loan. Your credit scores already allow you good rates, so now it's just a matter of what your $130k can afford.

Most lenders want to see 6 months to one year of work history before their income can be used for the qualification purposes.

Yes, paying off the student loan will lower your TDS obligations, some lenders (but not all) use 32% and 40% respectively for GDS and TDS. This means your monthly mortgage cannot exceed 32% of gross monthly income and total monthly debt payments, including mortgage, cannot exceed 40% of gross monthly income.

If you need to get into a home before your spouse has been gainfully employed for 6 months, your sole income can qualify for a mortgage of approx $590k, but since you have 20% down you can stretch your GDS/TDS to 39/44 which gives you a max mortgage of $736k (at 30 yrs amortization). Add your down payment and you can easily qualify for a home of $850k. Remember this is based on having no other monthly debts (car loans, leases, personal loans, lines of credit).

If you wait till your wife is employed, include her income and pay off the student loan, you can qualify for just over $1 mil.

You are good to go now, provided you don't have other significant debt.
Realtor® & Mortgage Agent

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