The National Association of Real Estate Brokers is calling on the Federal Housing Administration to scrap underwriting rules it says unfairly penalize married borrowers by requiring lenders to count a non-borrowing spouse’s debt on mortgage applications — even when that spouse has no legal obligation to repay the loan.
NAREB President Ashley Thomas III, rallying Congress, housing advocates and state regulators behind the push, said the policy change is necessary to ensure equitable treatment for all borrowers regardless of marital status.
“FHA regulations create a punitive double standard that unfairly excludes creditworthy households from achieving the American dream of homeownership,” Thomas said. “When we force lenders to count a spouse’s debts without counting their income, we are actively punishing married couples. This outdated practice restricts mortgage access and severely hurts families trying to become homeowners.”
Under current FHA guidelines, lenders in community property states must include a non-borrowing spouse’s debts in an applicant’s debt-to-income ratio — even if that spouse is not on the loan or the title. The agency does not allow lenders to factor in that same spouse’s income unless they are an official co-borrower. The policy effectively inflates a borrower’s debt load, reducing purchasing power and pushing some families into lower price points or out of the market altogether.
Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — several of which have among the largest Black populations in the country.
Thomas noted that Black homebuyers already face significant historic barriers, and said the FHA rule compounds them. Black households receive between 12% and 15% of all FHA loans — a disproportionately high share relative to their slice of overall mortgage originations — making the program a critical pathway to ownership. Black homeownership currently stands at just over 45%, compared with more than 74% for white households.
In community property states, Black borrowers already face higher loan denial rates and receive smaller approved mortgage amounts compared to white borrowers, NAREB said. Inconsistencies in how lenders interpret common-law marriages and spousal obligations add further confusion around eligibility.
NAREB is calling the effort the Community Property Fairness Initiative. The proposed change would align FHA practices with standards used by Fannie Mae and Freddie Mac, which assess only the financial obligations of individuals who actually sign the note.
“The Community Property Fairness Initiative is not about weakening underwriting standards or adding risk to our federal insurance funds,” Thomas said. “The goal is to ensure consistency, logic, and fairness in how we evaluate borrower obligations. Fannie Mae and Freddie Mac already manage this successfully by focusing on contractual liability. It is time for the Federal Housing Administration to modernize its interpretation of state laws and align its rules with the conventional market so that all spousal obligations are handled uniformly across federal agencies.”
NAREB also argues the current FHA guidelines raise fair lending concerns. The Equal Credit Opportunity Act bars lenders from denying or discouraging loan applications based on marital status, and the group contends that any federal policy treating an application less favorably because an applicant is married or lives in a specific state runs counter to that law.
“NAREB is committed to supporting policies and practices that dismantle systemic barriers to property ownership,” Thomas said. “By raising the public discourse over this policy, NAREB aims to affirm that state community property laws do not mandate this restrictive underwriting. Eliminating this burdensome requirement will promote fair access to credit, standardize mortgage qualification processes, and help increase homeownership.”
