VA Loans With a Spouse – Requirements, Benefits and Process

The VA home loan program provides huge benefits to eligible veterans and active duty servicemembers. These include no down payment no mortgage insurance, and favorable underwriting. But can you get a VA loan if you have a spouse? Here we’ll walk through VA loan eligibility with a spouse documentation needed, and tips for ensuring a smooth process.

Basic VA Loan Eligibility

The first criteria is that the borrower themselves must be eligible for VA financing based on their own military service record The general requirements are

• Served at least 90 consecutive days on active duty during wartime
• Served at least 181 cumulative days on active duty during peacetime
• Currently serving on active duty
• Be an unmarried surviving spouse of a veteran who died in service or from a service-connected disability

Assuming the borrower meets one of those thresholds, having a spouse does not disqualify you from VA financing. Even if the spouse has no military background themselves, they can still be party to a VA mortgage with the eligible borrower.

Some key advantages of using a VA loan with a spouse include

• No down payment required
• No monthly mortgage insurance
• Lower interest rates
• More forgiving credit and debt-to-income requirements
• Ability to roll closing costs into loan amount

This makes it easier to buy a home as a team. Now let’s look at the documentation needed.

Documentation When Applying With a Spouse

While your spouse doesn’t need to independently qualify for a VA loan based on their own service record, lenders will require some information from both parties when applying together:

From the borrower:

• DD-214 discharge papers
• Certificate of Eligibility
• VA entitlement documentation
• Income and tax returns
• Debt and credit history

From the non-veteran spouse:

• Income and tax returns
• Debt and credit history

The lender needs to assess the full financial picture of the household to ensure the VA underwriting guidelines are met. These include limits on your total debt-to-income ratio and satisfactory credit history.

VA loans are underwritten more leniently than conventional loans. But adding a spouse with poor credit or high debts may impact approval chances. The lender has to make sure the overall application makes sense.

Tips for Getting a VA Loan With Your Spouse

Here are some tips to make the VA loan process smooth when applying as a married couple:

• Apply with a reputable lender that specializes in VA loans. This ensures they understand the nuances.

• Check credit reports for both borrowers. Correct any errors that could negatively impact your score.

• Pay down revolving debts like credit cards to lower your ratios. Lenders can require this even if your credit is otherwise solid.

• Explain any red flags like collections or late payments. Documenting extenuating circumstances can help.

• Consider having your spouse apply alone if their credit profile is stronger. But run the numbers both ways.

• Include tax returns from previous years if current income seems like an anomaly. This gives more context.

• List both spouses on the contract and loan application. Even if only one is on the mortgage, both should be on title.

• Discuss how to hold title with your loan officer and real estate agent. Joint tenancy is common for married applicants.

• Don’t make any major purchases during the underwriting period. This can sour debt ratios. Wait until after closing.

As you can see, teamwork with your spouse is key to getting a VA home loan. Aligning your finances and documenting income sets you up for success.

Can a Spouse’s Credit Hurt Your Chances?

Since lenders have to consider the full financial profile, poor credit or high debts held by your spouse can potentially jeopardize your VA loan eligibility. Some scenarios where this could occur:

• Heavy past-due balances or collections on your spouse’s reports.

• Bankruptcies or foreclosures within the last 1-2 years.

• High revolving credit card balances inflating overall debt obligations.

• Spotty or insufficient credit history established by your spouse.

• Large student loan debt owed by your spouse.

• Your spouse’s income being required to meet VA debt-to-income limits.

While the VA program is flexible, lenders do have to adhere to basic underwriting standards. The above factors could result in a denied application.

Strategies to Overcome Credit Challenges

If your spouse’s financial profile is less than stellar, here are some tips to improve the chances your VA loan gets approved:

• Have your spouse apply alone without including their income. This may remove poor credit as a factor.

• Build your spouse’s credit history by adding them as an authorized user on established accounts you manage.

• Pay down high balances through a disciplined debt payoff plan. Then wait a few months and recheck credit.

• Write letters explaining past credit events and outlining the steps you’ve taken to improve the situation.

• Build up your savings to compensate for any shortfalls on your spouse’s end. Larger reserves help offset risk.

• Consider adding your spouse to the loan later through a refinance once their credit improves.

The key is fully disclosing and documenting your situation. VA underwriters have some flexibility to make reasonable judgments. But they can’t do so without the full story.

How to Add a Spouse to a Current VA Mortgage

For those who already have a VA loan in only your name, you may want to add your spouse later down the road. There are a couple options to accomplish this:

VA Streamline Refinance

Also called an IRRRL, this program lets you refinance an existing VA loan into a new one at lower rates/payments. You can add a spouse at the same time without any appraisal or credit checks.

VA Cash-Out Refinance

This lets you tap your home equity while refinancing into a lower payment. Your spouse can be added and their income can now help you qualify to take cash out.

When refinancing, you’ll need to provide the same documentation for your spouse outlined earlier. There may also be a funding fee charged, depending on your specific situation.

The Bottom Line

VA home loans deliver major perks that make buying a home more affordable, especially when combining two incomes. While a spouse’s finances are considered, the program offers more flexibility than conventional loans. Focus on putting your best foot forward as a team. With proper planning and candid discussions with your lender, you can overcome obstacles along the way.