Loan qualifications, inheriting large student debt from marriage

[Cory Raizor]

Hello,

I'm looking for some advice on the impact getting married will have on my/our ability to qualify for conventional financing. I'm planning on getting started as a buy and hold investor in the next year - my plan is to start via at least one if not 2 back to back househacks with an FHA loan.

I have a pretty high income and relatively little debt (under 15K combined consumer and student loans) so my debt to income is quite good. However... I'm getting married in several months and my fiance (whom I love dearly) is making only ~$45K/year with nearly $185K in student loans.

Will her debts just wreck our DTI ratio?

I'm a bit confused on if her student loan debt will be included in my qualifications when seeking a mortgage. Only if we file taxes jointly? Only if we get the property in both our names or put the mortgage in both our names? 

Just looking for a general discussion, I understand not everyone is a lawyer or CPA.

Also - before we get into the discussion of tackling loans before investing.. I'm pretty set on at least starting a househack. Doing so I can reduce my housing expenses from the ~$800-$1000/month to as close to free as possible. I then intend to use half of that savings against those loans and half towards a next house hack..

[Carl Fischer]

@Cory Raizor

Many things to consider. Fiancé most likely won’t be able to help on the loan/mortgage so keep it separate. You can have her on title if you like but don’t put her on the mortgage.  I find that works best anyway throughout your life.  My wife and I alternate on who gets the mortgages for the different properties -we try never to put both people on the same mortgage because it limits borrowing power. 

 It depends what the interest rate is on the student loan how fast you want to pay it off -as an example if it’s 3% or 4% and you’re making 10 or 15% on a house hack you can put all your money into the house hack and then use that money to pay off her debt.  The higher the interest rate on the loan the faster you want to pay it back in general. 

[Cory Raizor]

Hello @Carl Fischer, Thanks for jumping in. I had considered the individual limitations on getting conventional mortgages as well. So that's another good point. We're fortunate in that the weighted average interest rate on both her and my student loans are pretty low. We should also be able to refinance the outliers as well. Thanks for the input! 

[Harjeet Bhatti]

@Cory Raizor  Her debt or income won't count as long as she is not coming on loan even though she is only on title. But if its community state that's makes difference ( OH is not one of the community state).

[Matt P.]

Don't marry someone who took 185k in loans to land a job making 45k lol... Seriously though, you will probably be ok. I have financed all of my rental property myself the last few years and my wife's DTI never comes up, it's all based on my financials. Good luck!!

[Cory Raizor]

@Matt P. Tell me about it man, haha. But no, I know what I am getting into. She was the ideal prey of today's educational system. Uncertain of what she would enjoy and idealistic. Unfortunately for her she was a bit indecisive at the start of her college career and decided down a niche path that didn't have a great ROI . No one really explains this to you while your off soul searching in college. At any rate, she likes what she does and doesn't want to FURTHER invest in education to change her path. Best thing we can do now is earn what we can through our day jobs and build wealth in other avenues. If anything, it's a good motivator for us.

Enter Real Estate = )

[Carl Fischer]

@Cory Raizor

She was smart enough to reel you in.  😃 Wish you the best of luck. 

[Ryan D.]

There was a recent BPMoney podcast on dealing with excessive student loan debt. You should listen to that & get started on one of the recommended plans ASAP.

[Onica Cole]

In defense of the educated: There are some people who know exactly what they want and are passionate about their career and still end up with 6 figure debt and low starting pay (veterinarians). Btw I worked all through undergrad so that is only 4 years debt I reference ;)

But back to original post- I agree to only put 1 name on the loan- that's what we did, and my massive debt never hindered the process... Also I think that it may allow us to aquire a larger quantity of traditional home loans since in the future my DTI will be much better ;) ... Hopefully the same for your future wife.

PS- Go Bucks (Columbus was a great place to live!) and congrats on your engagement!