The VA loan is frequently used by veterans in conjunction with another applicant. Prospective homebuyers frequently have good reason to desire or require a co-borrower or joint applicant on their VA loan. Utilizing another person’s income, credit rating, and level of debt could significantly improve their loan eligibility.
Co-borrowing situations are not all straightforward, and some may be more challenging than others. What a Veteran should know about VA loans with multiple applicants is detailed below, along with typical co-borrower scenarios and co-borrower requirements.
This means your co-signer must be a qualified spouse or a current or former member of the armed forces. If you’re married, your spouse must be your cosigner. This helps ensure that payments will get made even if you’re deployed.
Do VA loans allow co-borrowers?
Yes, VA loans allow co-borrowers on the loan. A veteran and non-veteran spouse, two married veterans who each use one of their entitlements, two married veterans who both use both of their entitlements, and two unmarried veterans who each use both of their entitlements are all acceptable co-borrowers. When a veteran applies for a loan with a non-veteran, non-spouse applicant, the VA also permits this.
VA Loan Co-Borrower Requirements
The veteran and their spouse are typically co-borrowers on a VA loan, but another veteran who isn’t their spouse may also be a co-borrower.
The same financial requirements apply to co-borrowers on VA loans as they do to other VA loan applicants. In some cases, this can help. In other cases, it may hurt. It can be expensive to calculate someone else’s income because you are dependent on their credit and financial situation. The VA and lender requirements for things like a minimum credit score, a debt-to-income ratio, and more must be met by each borrower on the loan with you.
Typically, the VA only permits a maximum of four borrowers per loan. For co-borrowing, this includes:
Non-spousal co-borrowers, also known as joint VA loan borrowers, are not expressly prohibited by the VA. In such cases, the agency informs VA lenders that it will only guarantee the portion of the mortgage that belongs to eligible borrowers. That means that a portion of the mortgage is left without the government support that the program depends on.
Does this imply that you cannot obtain a VA loan with your fiance, fiancée, long-term partner, or civilian neighbor? No.
Let’s examine requirements for joint VA loans in more detail.
Joint VA Loan Requirements
Veterans and non-spouse, non-veteran co-borrowers can apply for joint VA loans from lenders like Veterans United. For instance, a joint VA loan would be obtained by a Veteran and their brother, parent, or unmarried partner.
Although joint VA loan scenarios are entirely feasible, they differ from the typical VA purchase loan in appearance. They differ because the VA will only guarantee the loan’s veteran portion, which is typically half of the total amount.
Joint VA loans frequently require the non-veteran co-borrower to contribute a down payment to cover their portion of the loan. How much depends on a number of variables, including entitlement and the cost of the home. It is best to speak with a home loan expert about joint VA loans because they can become complicated quickly.
In addition to the down payment, the veterans’ income must be enough to repay their share of the loan, and the non-veterans’ income must be sufficient to repay their share. Making it to closing can be challenging if neither party has the necessary funds to pay their portion of the mortgage.
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To learn more about the benefits your military service has earned for you, please respond to the questions below.
VA Loan Co-Signer Requirements
Utilizing a co-signer for your VA loan is the final thing to think about. Co-signer and co-borrower are often used interchangeably when they refer to two distinct concepts.
The difference between a co-borrower and a co-signer is that the former occupies the property and shares the debt (and ownership), while the latter does not.
The only co-signers permitted for a VA loan, however, are your legally married spouse and an unmarried military member.
Common VA Loan Co-Borrowing Scenarios
Let’s examine a few VA loan co-borrowing scenarios and how they might affect your application for a VA loan.
Scenario 1: VA-Eligible Borrowers and Unmarried Partners
There will be varying levels of financial scrutiny for different co-borrowers. Be prepared to need money for a down payment if you intend to co-borrow with an unmarried partner or friend who will live in the house with you. Keep in mind that the VA will only guarantee the portion of the loan that belongs to VA-eligible borrowers. This also applies to VA refinancing.
Scenario 2: VA-Eligible Borrower and Spouse
There are no down payment requirements if you have a spouse or eligible Veteran on the loan who will also reside in the home. An important financial benefit of the VA loan is the ability to make a purchase with no down payment, which almost 8 in 10 VA buyers utilized just last year.
Scenario 3: Two Married or Unmarried VA-Eligible Borrowers
Two qualified Veterans who want to use their VA home loan benefits have a few choices. You can use all of a borrower’s entitlement while keeping the rest for a later date. The remaining entitlement of one borrower from a prior VA home loan can be combined with the remaining entitlement of the other borrower, or you can divide your entitlement equally.
Our prior post, VA Loan Entitlement Options for Military Couples, provides a detailed analysis of VA lending for military couples.
Have a more in-depth discussion about how to use your entitlement if your co-borrower is also a Veteran or a service member who is eligible for a VA loan.
Visit our other article to learn more about dual entitlement choices and military couples applying for VA home loans.
VA Refinance and Co-Borrowers
Co-borrower relationships can get tricky post-purchase, too.
For instance, the civilian spouse is not automatically qualified to refinance the house with a VA loan if a couple uses a VA loan to buy it and then gets divorced.
See What You Qualify For
To learn more about the benefits your military service has earned for you, please respond to the questions below.
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Calculations for VA Loan Rates and APR are current as of Dec. 11 at 06:07 CST.
Mortgage rates update at least daily. Not all loan types are available in every state.
The availability of all rates will be determined by a person’s credit score and the specifics of the loan transaction. First-time homebuyers may not qualify for a jumbo product. The interest rates shown here are indicative only and are not guaranteed until your loan officer locks them in.
All rates are based on a single-family primary residence (excluding manufactured homes), a credit score of 720, the inclusion of all applicable charges and fees, including the VA Funding Fee, and 181 days of eligible active regular (non-reserves) military service without any service-connected disabilities or prior use of a VA Loan.
APR calculations and loan rates make additional assumptions based on the type of loan described.
Fixed-Rate Purchase Loan Assumptions:
Current advertised rates: 5. 375% (6. 102% APR) with 1. For a 15-year fixed VA loan with a 30-day lock period, 500 discount points, and 5 375% (5. 823% APR) with 1. 750 discount points for a 30-year fixed VA loan with a 30-day lock period. These interest rates are based on a $250,000 loan amount and no down payment.
Streamline (IRRRL) Loan Assumptions:
Current advertised rates: 6. 375% (6. 650% APR) with 0. 60-day lock period with 250 discount points for a 15-Year Streamline (IRRRL), and 6 500% (6. 668% APR) with 0. For a 30-Year Streamline (IRRRL), 250 discount points on a 60-day lock period are available. These refinance loan rates presume that the home will be occupied by the borrower.
Cash-Out Loan Assumptions:
Current advertised rates: 6. 375% (6. 930% APR) with 0. For a 15-year VA cash-out refinance, 250 discount points are required with a 60-day lock period, and 6 500% (6. 839% APR) with 0. For a 30-Year VA Cash Out refinance, 250 discount points with a 60-day lock period are required. These loan rates for refinancing are based on a loan-to-value ratio of less than 90%.
Jumbo Loan Assumptions:
Current advertised rates: 6. 125% (6. 502% APR) with 0. 45-day lock period with 750 discount points for a 30-Year Fixed VA Jumbo, 6 625% (6. 818% APR) with 0. 60-day lock period with 500 discount points for a 30-Year Streamline (IRRRL) Jumbo, and 6 625% (6. 990% APR) and 0. For a 30-Year VA Cash-Out Jumbo, 500 discount points on a 60-day lock period are available. Additionally, these interest rates assume that the loan amount will exceed the current conforming loan limits. For most of the United States in 2021, even though the conforming loan limit varies depending on where you live, your loan must be more than $548,250 to be considered jumbo. Loans in Alaska, California, and Hawaii may be priced separately and subject to special requirements for jumbo loans.
FAQ
Can you have a co applicant on a VA loan?
Yes, VA loans allow co-borrowers on the loan. A veteran and non-veteran spouse, two married veterans who each use one of their entitlements, two married veterans who both use both of their entitlements, and two unmarried veterans who each use both of their entitlements are all acceptable co-borrowers.
Can my mother cosign for a VA loan?
A cosigner for a Joint VA Loan must be at least 18 years old in order to sign the loan documents. They are not required to be the veteran’s spouse or a family member. Lenders have long informed veterans that the only acceptable cosigner for a VA loan is their spouse.
Can I have a non occupant co borrower on a VA loan?
The VA states that a non-occupant co-borrower, in this case also known as a co-signer, is not permitted. The co-signer must reside in the home and use it as their primary residence in order to co-sign for a VA loan.
What disqualifies you for a VA loan?
Veterans must be released from the military under circumstances other than dishonorable discharge in order to maintain their veteran status. Dishonorable discharged veterans are ineligible to apply for the VA Loan Guaranty program.