Question:

A buyer moves to town. His or her spouse worked at their last location but they can't go back to work until after they buy a house and get settled. They don't qualify on just one income. What can we do?

Answer:

The spouse that can't go back to work until after the purchase of a house is called the trailing spouse. If any income is considered from this spouse, the income then logically is known as trailing spouse income. As a rule, most lenders will not consider this income other than for a compensating factor. That is, the income potential is recognized, but not used in qualifying. This would be a correct application for most loan programs, however we have access to a fixed rate conventional loan program where trailing spouse income may be counted directly.

By allowing trailing spouse income, in fact two days before this writing, we approved a 95% conventional loan with a back ratio of approximately 48%. Something unheard of for most lenders. The back ratio shown was of course using the borrowers income only. When allowing for income from the trailing spouse, the ration on the loan was only 34% and thus the loan was approvable.

This is not to imply trailing spouse income will work on every case, or that it should be counted in every case. But certainly in cases where a spouse has had steady employment over the years in a professional or semi-professional career field, and it is obvious that they will return to work, this tool should be given consideration.

There are a number of technicalities in applying this technique.