When you purchase a home in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) and are married, you need to take into account your spouse’s debts in relation to yours, even if one person is going on the loan due to credit or income reasons. For example Mr. and Mrs. Smith just got married and Mrs. Smith has a $500 a month car payment and a $25 minimum credit card payment, both accounts would need to be included in Mr. Smiths’ debt to income ratio even if he is the only borrower on the loan.
If both people are engaged then they are legally not married then the significant others’ debts do not need to be accounted for. Negative debt such as collections or charge offs are not applicable either. On the flip side, if you are a cosigner or co borrower on a debt because your significant other cannot purchase it on their own (community property state or not). That will reflect on your credit report. Even if there is a divorce and the decree states that one party retains ownership, the account will still reflect on the credit bureaus until you are refinanced or taken off the debt. This potentially could cause problems if one party decides to stop paying the account. This is why it is so important to get in touch with a loan officer prior to purchasing a home, because they will be able to fully review the file. They will be able to determine which accounts need to be included in the debt to income ratio and which ones can be excluded, paid off, or need to be taken care of.