Many Veterans who utilize the VA loan do so with another applicant. It often makes sense for prospective homebuyers to want or need another applicant on their VA loan. Using another persons income, credit score and debt level can do wonders for loan qualification.
However, not all co-borrowing scenarios are easy, and some may be harder than others. Below we break down everything a Veteran should know about VA loans with multiple applicants, including co-signers, common co-borrower scenarios and co-borrower requirements.
Getting a VA loan with a cosigner can be a great option for veterans who need some extra help qualifying for their home loan. As a veteran myself, I understand how confusing VA loan guidelines can be, especially when it comes to adding a cosigner to your application. In this comprehensive guide, I’ll walk you through everything you need to know about getting a VA loan with a cosigner, from eligibility requirements to the application process
What is a VA Loan Cosigner?
A cosigner on a VA loan acts as a guarantor for the loan. They don’t have an ownership interest in the property, but they do share legal responsibility for repaying the debt if the primary borrower defaults. The main purpose of a VA cosigner is to help the primary borrower qualify for the loan by using the cosigner’s income, assets, and credit history to meet underwriting guidelines.
Adding a cosigner to your VA loan application can be helpful if you have
- A lower credit score
- High debt-to-income ratio
- Little savings for a down payment
- Limited or irregular income
By utilizing your cosigner’s financial profile, you may have an easier time getting approved for the VA mortgage you want.
VA Loan Cosigner Requirements
The VA has specific rules regarding who can and cannot cosign on a VA home loan. Here are the key requirements to be aware of:
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Must be a veteran or military spouse – To get the full VA loan guaranty, the cosigner must be an eligible veteran or the spouse of a veteran. The VA will only guarantee loans made to eligible borrowers.
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Must live in the home – All VA borrowers and cosigners must intend to live in the home as their primary residence.
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Must meet underwriting criteria – Cosigners are subject to the same underwriting standards for income, employment, assets, credit, and debt-to-income ratios. Their finances will be reviewed as part of the application.
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Shared legal responsibility – The cosigner is equally responsible for repaying the loan, even if their name isn’t on the mortgage title. If the primary borrower defaults, the lender can pursue both parties.
As you can see, being a VA cosigner isn’t something to take lightly. Make sure whoever you choose understands the legal implications of cosigning a mortgage. An ideal cosigner has excellent credit and financial strength.
How Does a Cosigner Help You Qualify?
There are a few ways an eligible VA cosigner can improve your chances of approval:
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Supplementing your income – Lenders can count cosigner income when calculating the debt-to-income ratio. This may help you meet the DTI requirements.
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Increasing your credit score – Most lenders use the middle credit score between borrowers. A cosigner with stellar credit can raise the average.
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Providing additional assets – Large cosigner assets like cash reserves may help cover any down payment or closing costs needed.
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Offsetting credit issues – Even a minor negative credit item on your report could lead to a denial. An excellent cosigner profile can sometimes offset credit dings.
Again, it’s crucial that your cosigner has a strong financial position in all areas. Otherwise, involving them could sink your chances instead of helping.
Applying for a VA Loan With a Cosigner
If you’ve confirmed your cosigner is eligible and willing to assist, here are some tips for navigating the application process:
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Check lender policies – Some lenders are more welcoming of cosigned VA loans than others. Shop around to find one suitable for your scenario.
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Review all paperwork thoroughly – Make sure documents correctly include and represent the cosigner where required.
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Get pre-approved together – Including the cosigner up front gives the most accurate view of your joint eligibility and borrowing power.
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List the cosigner on the purchase contract – This ensures they can be party to the transaction as planned.
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Attend closing together – All loan applicants should be present to sign final docs. Coordinate schedules with your cosigner.
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Add cosigner to home title – While not required, this may give the cosigner better legal protections in case of default.
Take the time to understand the cosigner’s role at each step. Communicate clearly with your lender and real estate agent so the process goes smoothly.
Alternatives to a VA Cosigner
Some other options exist if you’re having trouble qualifying for a VA loan on your own:
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Apply with a co-borrower – Adding a veteran spouse or partner as a co-borrower may work better than a cosigner in some cases.
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Look into down payment programs – Federal, state, and local programs provide down payment and closing cost grants and loans to eligible borrowers.
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Improve your finances – Paying down debts, increasing income, or waiting to improve your credit score could help you qualify without the need for a cosigner.
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Explore adjustable-rate mortgages – ARM loans often have lower qualification standards than fixed-rate loans. Just be mindful of the risks.
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Get pre-qualified, not just pre-approved – Pre-qualification is more rigorous and may give you a better sense of your true standalone eligibility.
Think carefully before engaging a cosigner. While it may help you get approved, it also puts your friend or family member on the hook for the mortgage if you can’t pay. Consider all your options before making a decision.
Common Questions about VA Cosigners
Here are answers to some frequently asked questions about getting a VA home loan with a cosigner:
Can my girlfriend or boyfriend cosign on my VA loan?
Unfortunately no. Due to legal marital status requirements, unmarried partners cannot qualify as veteran spouses for VA underwriting purposes.
What if my cosigner isn’t a veteran?
The VA only guarantees loans made to eligible veteran borrowers. Having a non-veteran cosigner would put your lender at risk for any unguaranteed portion, which most lenders are unwilling to do.
Can I remove my cosigner from the loan later?
You typically cannot remove a cosigner from a mortgage without refinancing in just your own name. This requires you to qualify on your own credit/income.
Does a cosigner have to be a relative?
No, your cosigner does not need to be a family member. However, a relative may be more willing to take on the responsibility than other acquaintances.
What debts does my cosigner’s DTI ratio include?
Lenders will look at your cosigner’s total monthly obligations when calculating their debt-to-income ratio, including mortgage payments, credit cards, auto loans, student loans, child support, and other liabilities.
Wrap Up
Check Out Joint VA Loan Requirements
Answer a few questions below to speak with a specialist about what your military service has earned you.
VA Loan Co-Borrower Requirements
A co-borrower on a VA loan typically includes the Veteran and their spouse but may also include another Veteran who isnt their spouse.
Co-borrowers on VA loans must live in the home and meet the same financial guidelines as other VA loan applicants. In some cases, this can help. In other cases, it may hurt. Counting someone elses income can come at a cost — youre at the mercy of their credit and financial profile.
Every applicant on your loan needs to meet the VAs and lenders requirements for things like minimum credit score, debt-to-income ratio and more.
The VA typically allows a max of four borrowers on any loan. For co-borrowing, this includes:
- A Veteran and non-Veteran spouse
- Two married Veterans where only one Veteran uses their entitlement
- Two married Veterans where both Veterans use a portion of their entitlement
- Two non-married Veterans where both Veterans use a portion of their entitlement.
The VA doesnt expressly prohibit non-spousal co-borrowers, otherwise known as a joint VA loan. In those instances, the agency tells VA lenders that it will only guarantee the eligible borrowers portion of the home loan. That leaves a chunk of the mortgage without the government backing the program relies upon.
Does that mean you cant secure a VA loan with your fiancé or fiancée, your long-time significant other or your civilian neighbor? No.
Lets take a quick look at joint VA loans.
Lenders, including Veterans United, provide joint VA loans for Veterans and non-spouse, non-veteran co-borrowers. For example, if a Veteran got a VA loan with their brother, parent or unmarried significant other, thats a joint VA loan.
Joint VA loans are absolutely possible, but they look different from a typical VA purchase loan. Theyre different because the VAs guaranty extends only to the Veterans portion of the loan (half in most cases).
Most of the time, joint loans wind up requiring a down payment to account for the part the VA doesn’t guarantee. The amount depends on a few factors, including entitlement and the homes price.