Getting a VA Loan With a Non-Spouse Co-Borrower

Purchasing a home is an exciting milestone in life. For many veterans a VA home loan can help make homeownership more affordable. VA loans offer valuable benefits like no down payment and flexible credit guidelines. But what if you want to buy a house with someone who isn’t your spouse – like a girlfriend boyfriend, family member or friend? Is it possible to get a VA mortgage with a non-spouse co-borrower?

The short answer is yes, you can get a VA loan with a non-spouse. However, there are some important factors to consider. In this comprehensive guide, we’ll explain everything you need to know about getting a VA mortgage with someone other than your spouse.

What is a VA Loan Co-Borrower?

First let’s clarify some terminology. A co-borrower is someone who applies for and receives a mortgage loan with the primary borrower. They have equal rights and responsibilities regarding the loan. Both borrowers’ names will appear on the deed and mortgage.

Co-borrowers are different from co-signers who guarantee the loan but don’t have ownership rights to the property. With a VA loan, acceptable co-borrowers include

• Spouse
• Another eligible veteran
• Non-spouse (also called a joint VA loan)

So if you want to buy a house with your girlfriend, parent, sibling, friend, etc, you would apply as co-borrowers on a joint VA loan.

Joint VA Loans Explained

The Department of Veterans Affairs (VA) provides loan guarantees that enable veterans and active duty servicemembers to get mortgages with favorable terms. These VA home loans require little or no down payment and have looser credit standards than conventional loans.

By law, the VA can only guarantee the veteran borrower’s portion of a joint VA loan. For example, if a veteran co-borrows with a non-veteran, the VA will guarantee 50% of the loan amount. The lender assumes the risk for the remaining 50%.

As a result, most lenders will require a down payment on a joint VA loan. This compensates for the part not guaranteed by the VA. The down payment is usually around 10-25% of the purchase price.

Joint VA Loan Requirements

Here are some key requirements for VA loans with non-spouse co-borrowers:

• The veteran must be an eligible borrower who will personally occupy the home
• Non-spouse co-borrowers must also occupy the home
• Down payment is often required, usually 10-25%
• Co-borrowers’ income can be used to qualify
• Co-borrowers must meet VA credit and underwriting guidelines
• VA loan limits and other rules still apply

The exact joint VA loan guidelines can vary a bit by lender. So be sure to check with the lender early in the process to understand their specific policies.

Pros and Cons of Joint VA Loans

Joint VA loans offer some advantages but also have downsides to consider:

Pros:

• Share homeownership responsibilities
• Leverage non-spouse’s income to qualify
• Build home equity together
• VA benefits still apply to veteran’s portion

Cons:

• Down payment usually required
• Less VA guaranty protection
• Both co-borrowers on hook for payments
• More complicated process

As you can see, there are good reasons to apply with a non-spouse. But joint VA loans don’t provide the full benefits of a veteran-only or spouse-only VA loan.

Joint VA Loan Scenarios

Let’s look at some common scenarios for getting a VA mortgage with a non-spouse:

Unmarried Couples

It’s increasingly popular for unmarried couples to buy a home together. This includes couples who are engaged, cohabiting or in a long-term relationship. Joint VA loans allow them to purchase a home before marriage. However, they’ll need to save up for a down payment.

Family Members

You may want to apply for a mortgage with a family member, like a parent, sibling or child. This can make homeownership more feasible. A family member’s income can help you qualify for a larger loan amount. Just remember you’ll be equally responsible for the payments.

Friends

Some friends opt to buy investment properties or vacation homes together. Others choose to co-purchase a primary residence as roommates. This setup allows single friends to buy a pricier house. But apply with caution – you’re tying your finances together.

Domestic Partnerships

Same-sex and LGBTQ couples can utilize joint VA loans in lieu of spousal loans if they cannot or choose not to marry. They’ll need to save up for a down payment.

Tips for Getting a Joint VA Loan

If you’ve decided to apply for a mortgage with a non-spouse, here are some tips to make the process smoother:

• Shop lenders and compare joint VA loan options. Not all lenders offer them.
• Save up money for a down payment. Budget for 10-25% of the purchase price.
• Make sure your co-borrower has a good credit score and steady income. Their financial profile impacts qualification.
• Get pre-approved together so you know the loan amount and terms you qualify for.
• Consult a real estate agent experienced with VA loans and co-borrowing scenarios.
• Read up on VA loan guidelines and joint loan requirements so you know what to expect.
• Discuss an exit strategy in case the co-borrowing situation doesn’t work out long-term.

Alternatives to Joint VA Loans

Another option is for the veteran to apply for the VA loan on their own. Then the non-veteran can provide a gift to help with the down payment and closing costs. This preserves the full VA loan benefit for the borrower.

You might also consider a different loan program that allows non-spouse co-borrowers more easily. Conventional, FHA, and USDA loans permit co-borrowing with any occupant borrower. The downside is you lose the VA advantages.

The Bottom Line

Joint VA loans offer veterans a path to homeownership with non-spouse partners. But they come with more requirements compared to veteran-only or spouse-only VA loans. If you’re willing to save up for a down payment and meet stricter criteria, co-borrowing with a VA mortgage is certainly possible. Just make sure you understand the pros, cons and guidelines before applying.