If you are a military member or veteran you may be wondering if you can have a co-borrower on a VA home loan. There is an option for a joint loan, however, sometimes it is not necessary to have co-borrowers. Continue reading to learn more about joint VA home loans, requirements, and when to use this loan option.
What is a Joint VA Loan?
A joint VA loan is a VA-backed home loan for a military borrower and additional co-borrowers. At least one co-borrower must meet the eligibility requirements set by the Department of Veterans Affairs. They can also be a widow or widower of a qualifying veteran.
Although all borrowers do not have to meet the military service requirements if more than one person does meet, they can use their VA entitlement too. If a veteran borrower is applying for a VA loan with their spouse, they can simply apply for a standard VA loan rather than a joint VA loan because married couples are considered one entity.
Eligibility Requirements for a VA Loan
At least one co-borrower must meet one or more of the following requirements:
- You served 90 consecutive days of active service during wartime.
- You served 181 days of active service during peacetime.
- You have 6 years of service with the National Guard or Reserves or served 90 days (minimum of 30 days consecutively) under Title 32 orders.
- You are the spouse of a service member who died while serving or due to a service-connected disability.
VA loan entitlement is the amount that the VA will pay the lender if you default on the loan. The VA does not lend the money, but it guarantees lenders up to 25% of the loan. This is why lenders are typically more lenient when it comes to credit scores and debt-to-income ratios on a VA loan.
If you have full entitlement you do not have a home loan limit and will not have to pay a down payment. It means that the VA guarantees that they will pay up to 25% of the loan amount to your lender if you default on a loan that is over $144,000.
If you have full entitlement, then you must meet one of these requirements:
- You have never used your home loan benefit.
- You’ve paid a previous VA loan in full and sold the property.
- You’ve used the benefit, had a foreclosure, and then repaid the VA in full.
If you have remaining entitlement, then the VA home loan is based on the county loan limit where you live. If you were to default on the loan, the VA will pay a portion of the loan, up to 25%, of what the county loan limit is minus the amount of your entitlement you have already used. You can use the remaining entitlement to take out another VA home loan.
If you have remaining entitlement, then you must meet one of these requirements:
- You have an active VA loan that you are paying back.
- You paid a previous loan in full and still own the home.
- You refinanced your VA loan into a non-VA loan and still own the home.
- You had a compromised claim on a previous loan and did not repay it in full.
- You had a deed in lieu of foreclosure on a previous VA loan (to avoid foreclosure).
- You had a foreclosure on a previous loan and did not repay it in full.
The county loan limit can impact your purchase because, between the entitlement and your down payment, it will need to cover 25% of the loan amount. You can find the remaining entitlement information on the certificate of eligibility (COE).
Pros and Cons of Joint VA Loans
Listed below are the most common pros and cons of the joint VA loan option.
Pros of Joint VA Loans
- Buy a More Expensive Home
- Purchase Home with Others (Not a Spouse)
- Excellent Mortgage Rates
- No Mortgage Insurance
Cons of Joint VA Loans
- Possible Down Payment
- Non-Service Members May Need a Down Payment
- Occupancy Requirements
- VA Eligible Borrower Must Reside in the Home
- VA Funding Fee
- 2.15% for 1st Time Borrowers
- 3.3% for Subsequent Borrowers
When to Use a Joint VA Loan
Listed below are common scenarios that a joint VA loan is used:
- You don’t have the income to qualify on your own.
- You have too much debt to qualify on your own right now.
- Your VA entitlement is used on another home.
- You want to purchase a multifamily home with more than four units.
How to Apply for a Joint VA Loan
The first step in applying for a joint VA loan is to meet with a private mortgage lender. Each lender will have different requirements for credit scores, debt-to-income ratios, etc even though the VA does not have specific requirements for them.
It is also important for you to have a certificate of eligibility or COE. Most lenders can access this information through an online system called Web LGY in the event that you do not already have one. Lenders will also request copies of certain financial documents to ensure that the debt to apply for a joint VA loan is in an acceptable range.
Lastly, most lenders will want to see that you have enough savings to cover two months’ worth of mortgage payments. This is seen as added protection to the lender if you and/or co-borrowers have a decrease in monthly income.
VA Loans with VA Loans for Vets
If you are an active duty service member, veteran, or surviving spouse who is interested in buying a home, you may qualify for a VA mortgage.
If you are looking to purchase a home but are not sure if you qualify, check your eligibility today or contact the VA Loans for Vets team at (602) 908-5849 to begin the process.