Astoria, NY · Member since 2013 · 40 posts · 4 votes
Hey guys!
I couldn't find a forum that answered my question so I thought I'd start a new one.
This is kind of a long term question:
My plan is to buy a multi family home via an FHA loan. I live in New York City so even 3.5% down is a big chunk of change. I'm currently saving up the down payment.
I have excellent credit, a steady monthly income, etc. I shouldn't encounter any problems with the mortgage.
My question is: I'm a newly wed (been married for 6 months). My wife has no credit at all. She has never had a credit card.
What do you think I should do for long term investing.
I'm been reading on BP that the first 4 houses are fairly easy…then you have to get creative with your financing.
Maybe I should put the first four houses in my name alone while my wife gets a credit card and starts building her own credit? After my fourth house, we can start getting houses in her name?
Again, this is a long term buy and hold strategy. I'm not going to over leverage myself too quickly, haha.
Thanks!
P.S. if I missed a forum that covers something like this, any link would be appreciated :)
Your wife's lack of credit can be addressed by adding her to your already active accounts. You are married, so this should not be a big deal. She will then enjoy the same credit line reporting that comes from the accounts currently in your name. In some cases, her credit will show up within 30 to 60 days of adding her to your credit.
If for some reason that is not desired, then help her go establish credit.
Qualifying for an investment property is different than for a primary residence. If she is the primary borrower for the investment property, she must qualify in full. This means her income will have to cover the debts she has as well as the debt of the new loan.
It seems you may be a little confused about the future property and the vesting in order to qualify for a loan. In that confusion I would say, do not consider the two of you as separate people, you are married and essentially more like one entity. Your marital debts will be factored in for both of you in individual loan scenarios. This can include the mortgage on a Primary Residence, even in the event she is not on the mortgage. In most underwriting cases, this would not happen if the property was an investment property in your name. In that case, that debt may be exempt from her qualification.
In general, you don't get to simply swap names to continue qualify for loans. There is a bit more to it then that.
You have some time to work through this, you do not have the first one done yet. I would venture to say, there is no real benefit to not put her on your primary residence loan. It will only help her credit. So build her credit and get her on that loan. In most cases, she will be charged with covering the debt on it anyway. And without really knowing what the income and asset situation looks like much of the advice will be speculation.
For the future properties, Fannie/Freddie loans guidelines allow for more than 4 but some lenders do not grant the same rule. This is their prerogative. That said, a local bank or portfolio lender (one who does not plan to sell the loan to Fannie/Freddie) may allow for more properties. Local banks can be a good resource for this.
Qualifying for an investment property is different than for a primary residence. If she is the primary borrower for the investment property, she must qualify in full. This means her income will have to cover the debts she has as well as the debt of the new loan.
It seems you may be a little confused about the future property and the vesting in order to qualify for a loan. In that confusion I would say, do not consider the two of you as separate people, you are married and essentially more like one entity. Your marital debts will be factored in for both of you in individual loan scenarios. This can include the mortgage on a Primary Residence, even in the event she is not on the mortgage. In most underwriting cases, this would not happen if the property was an investment property in your name. In that case, that debt may be exempt from her qualification.
This seems a little cloudy so I'll clarify a bit. Your wife is not going to be a primary borrower buying the property herslf, she will be a co-borrower. She doesn't need any income if you qualify as the primary. All debts held between you will be considered if she is a co-borrower. When one has no credit, as a co-borrower that is really not an issue, it is with the primary borrower. However if a co-borrowe has bad credit, that is an issue, in such case you simply keep the spouse (who is not needed for qualification) off the note or mortgage but they will be required to execute the deed of trust orsecurity agreements due to marital interests. :)
A relative of mine made me feel a little paranoid when she found out my wife doesn't have credit. Haha, I figured someone on BP would steer me in the right direction.