The Home Category The Home: family money matters

Does having dependents affect applying for a mortgage?

Finding a home and seeking a mortgage is often a complex and multifaceted task.

You must first find a lender or broker who will work with you, then go through an intense evaluation to get a final approval. One issue that you should consider during this process, if it applies, is the effect of having dependents on your mortgage application.

Applying for a mortgage

In order to apply for a mortgage loan, applicants must complete a Form 1003 (Uniform Residential Loan Application).

The main purpose of the Form 1003 is to evaluate the creditworthiness and income of the applicant.

The form asks questions about the property you wish to purchase, your income and other assets of value. It also requests information about the borrower and co-borrower's debts and other expenses.

What is a dependent

A dependent is a person whom the borrower supports financially.

In most cases, the person is a member of the borrower's household, with certain exceptions, such as a college student living on campus who is fully supported by his parents. In many cases, an applicant can use the number of dependents listed on the most recent tax return as a guideline when filling out a mortgage application.

Spouse as co-borrower

Generally, a spouse is considered a dependent of the primary borrower.

The spouse can be listed on the mortgage application as a co-borrower or just as a dependent.

If the spouse is a co-borrower, he will definitely have an effect on whether the mortgage application is approved. The lender must evaluate the spouse's credit history and income in addition to the primary borrower's information to make a final decision on whether to extend the loan.

Other dependents effect

When an applicant has other dependents in his household, such as children, he must also account for them on the Form 1003 application (this includes a spouse who is not applying as a co-borrower). Under the "Borrower Information" section, the mortgage lender seeks information about the total number of dependents, including children and other parties who receive support from the borrower. Having dependents could affect the application in that the lender may consider the additional cost of supporting these people when evaluating the borrower's financial situation.