Split Loans Between Husband/Wife to Delay 10 Loan Cap?

Question

Do any married couples put their investment property loans into only one person's name so that both people can each get 10 residential loans?

Chris Mason · Answer

Yup, this is a thing.

• Doesn't work quite as well for FHA/VA/USDA financing in a community property state, which ours is. Works fine with fannie and most jumbo.
• Needs to be the loan AND TITLE or we may still have to hit the other spouse with the property tax bill when calculating DTI. "Thor M., a married man, as his sole and separate property" is your new vesting.
• Get tight with a divorce and estate lawyer to figure out if you care about the "sole and separate property" part, and if so how much you care. (If your probability of divorce is 0% and you have wills already set up, you probably don't care at all, but IANAL)
• If you're going to make the switch, I'd want to do it one batch refinance with 7 or 9 or whatever simultaneous closings. Like ripping a band-aid off, it'll be painful but you're getting it over with and setting yourself up for the future. Bring some coffee to this signing...
• Obviously each spouse is qualifying 100% on their own. So you can use this trick OR the "shove all debt possible into the low-wage-earning spouse's name so one spouse's pre-mortgage DTI is 75% but the other one is at 8%," but not both.
• Make sure your lender is drilling down with you on your post-batch-refi DTI will be and giving you an idea of what you and your wife's purchasing power will be after the fact. You don't want to trade a property number cap for a DTI cap without realizing it.

Thor M. · Answer

Chris Mason  Amazing post!  Exactly what I was looking for.  Luckily, we only have one investment property at this point, so this strategy is prospective as we hope to acquire 2-3 properties this year.

I'm in SF, what sort of lending do you do?

Chris Mason · Answer

Hi Thor M.,

I don't do hard money or subprime. I do offer the full gamut of traditional stuff: fannie/freddie/fha/va/jumbo.

Cal C. · Answer

Yes.  But it is obviously harder to qualify that way.

Thor M. · Answer

Thanks @Cal C. and @Steve Vaughan

My wife and I have decent income so qualifying shouldn't be an issue at this point, but I wanted to make sure I wasn't missing other issues or pitfalls by employing this strategy.

Anyone have a bad experience splitting up loans like this?

Steve Vaughan · Answer

Ditto @Cal C.  My wife and I only have one property we are both on the loan and deed.  (An REO the bank financed and demanded it). We're in a community property state.  May think differently if not.  No reason to saddle both of us with credit if not necessary!

Split Loans Between Husband/Wife to Delay 10 Loan Cap?

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