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We want to borrow money to buy our first home. We will be married soon, and want to know how the combination of incomes, expenses and debts will impact the ability to get a mortgage.

There's the obvious benefit of two incomes rather than one. Are there any other effects, either good or bad?

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You need to provide a little more context. It sounds like you're comparing joint income to something else -- what's the baseline you're comparing to? –  bstpierre Feb 26 '11 at 13:32
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3 Answers

Several factors are considered in loans as significant as a home mortgage. I believe the most major factors are 1) Credit report, 2) Income, and 3) Employment status

If you borrow jointly, all joint factors are included, not just the favorable ones. Some wrinkles this can cause may include:

  1. Credit Report - The second person on the loan may have poor credit or no credit. This can/will hurt your rate or even prevent them from being listed on the loan at all, which will also mean you can't include their income.

    In addition, there are future consequences: that any late payments, default, foreclosure, etc. will be listed on all borrower's reports.

  2. Employment - When I purchased a home, there were rules about the borrower being employed in the same industry for a certain amount of time. I qualified but my wife didn't.

If you both have solid work history, great credit, and want to jointly own the home, then there shouldn't be any negatives. If this is not the case, compare both cases (fully, not just rates, as some agents could sneakily say you can get the same rate either way but then not tell you closing costs in one scenario are higher), and pick the one that is best overall.

This is just information from my recollection so make sure to verify and ask plenty of questions, don't go forward on assumptions.

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The bank will consider total of both parties income for the loan qualification. Provided both parties will be listed on the mortgage.

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It might be worth talking to a mortgage broker, even if you don't actually end up doing business with them.

Upfront Mortgage Brokers explained

Finding an upfront broker near you

In a nutshell, upfront brokers disclose what they are paid for their services openly and transparently. Many brokers don't, and you can't be too careful. But a consultation should be free. An experienced broker can help you to navigate the pros and cons mentioned by the other responders.

Personally, I would never do business with a broker who can't/won't show me a rate sheet on the day of the lock. That's my personal acid test.

You might be surprised by what the broker has to say regarding your situation. That was my experience, anyway.

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