My wife and I are purchasing our first home. Her credit was not good enough so I am the only one on the loan. The lender is requiring my wife to sign a quit claim deed. I don't know why.

If your wife is not on the loan, and if you fail to make the payments and the lender forecloses, the lender will have problems completing the foreclosure since she has an ownership interest. Most lenders avoid this problem by having the wife sign the mortgage but not the note. That way they have an agreement from the wife that she is giving up her ownership interest if you fail to make the payments and they have to foreclose, but it doesn't place any personal liability on her to make the payments. A quit claim deed from your wife to you will accomplish the same thing but then she is losing all of her ownership regardless of whether you make the payments.

If future foreclosure issues are the lender's only concern, and if there are no other issues with your wife's credit (such as the possibility of future judgments), then the lender should be satisfied by just having her sign the mortgage but not the note.