What is a VA Joint Loan?
A joint VA loan is a mortgage that allows two qualified non-spouse veterans or active-duty service members to buy a home together. A VA joint loan can also be used for a qualified veteran or active-duty service member to purchase a home with a non-military non-spouse co-borrower if approved by the VA and lender. This co-borrower could be a long-term partner, family member, or friend. Joint VA loans offer several benefits, including no down payment requirements for qualified active duty or veterans, lower interest rates, and more lenient credit requirements. Many prefer these loans because they are partially insured by the government, opening homeownership to buyers with lower credit scores and allowing VA-qualified buyers to have no down payment. This allows two non-married co-borrowers to buy a home together with all the benefits of a VA loan.
VA Joint Loan Requirements
To be eligible for a joint VA loan borrowers must meet the following requirements:
- Be a U.S. Citizen or permanent resident
- At least one borrower must have served on active duty/guard/reserve for the amount of time required for the era in which one has served, or have been discharged from active duty due to a service-connected disability.
- At least one borrower must have a Certificate of Eligibility or COE from the Department of Veteran Affairs.
Some lenders only offer joint VA loans for co-borrowers if all borrowers are VA-eligible. These loans allow non-married dual military couples or friends to buy a home together without needing to get married. Some lenders also allow one VA loan-eligible borrower to take out a VA joint loan with a non-military partner, family member, or friend. For these loans, a downpayment may be required for the portion of the loan not covered by the VA entitlement. (ADD IF REICHERT ALLOWS THIS KIND OF LOAN HERE)
Types of Joint VA Loan Borrowers
There are three common types of borrowers for VA joint loans.
- A qualified VA loan borrower who applies with one non-VA qualified borrower and one civilian co-borrower (down payment may be required.)
- Two qualified VA loan borrowers (active duty or qualified veteran) each using their own VA entitlement to potentially receive a larger VA loan together.
- Two qualified VA loan borrowers (active duty or qualified veteran) using just one VA entitlement.
Married couples do not need to apply for a VA joint loan because married couples are counted as one entity for VA loans if only one applicate is a qualified VA loan borrower. Spouses can still choose to count their incomes when applying for their traditional VA loan.
No matter how you apply for the VA joint loan, each borrower is responsible for the monthly mortgage payments on the loan. Make sure you know and trust your co-borrower to continue making their portion of the monthly payments for the life of the loan.
Why are VA Joint Loans Beneficial?
There are several benefits to using a VA joint loan:
- No downpayment requirement*: VA loans do not require a down payment *from borrowers who have earned a VA entitlement. This saves borrowers a lot of money and makes homeownership possible for many who otherwise would not be able to come up with a sizeable down payment.
- Lower interest rates: VA loans typically have lower interest rates than conventional mortgages because the loan is partially insured by the government. This allows the lender to see you as a lower risk and saves you money in the long run.
- More lenient credit requirements: VA loans typically have more lenient credit requirements than conventional mortgages, which can make it easier for borrowers to qualify. For joint VA loans, all co-borrowers must be able to qualify under current VA credit requirements.
- Ease of refinancing: VA loans are typically easier to refinance than conventional mortgages. This is especially helpful when interest rates are higher, leaving you open to more easily refinance when interest rates fall.
- More buying power: Applying for a joint VA loan can give you more buying power if it raises your income and debt-to-income ratio allowing you to qualify for a higher amount than you could qualify for on your own. For dual military borrowers, it can also raise your VA entitlement if both VA-qualified co-borrowers use their entitlements for a single joint loan.
Can YOU get a VA Joint Loan?
If you meet the VA qualification requirements, you can likely get a VA joint loan with your co-borrower. If you wish to take out a VA joint loan with someone who is not your spouse, and a non-military co-borrower check with your lender to see if they handle that kind of joint VA loan.
Before applying make sure you consider all possible drawbacks to a joint VA loan.
What are the drawbacks of a joint VA loan?
When you borrow with another person you take responsibility for their decisions and not just yours, both borrowers are responsible for the loan, meaning if one borrower defaults on the loan, the other borrower is still responsible for repaying the total loan with regular monthly payments.
If your lender allows you to apply with a non-spouse co-borrower, your co-borrower might need to make a down payment for their portion of the loan. This down payment may be up to 25% of their portion of the loan, equal to the VA entitlement guaranteed by the government.
The funding fee for a joint VA loan can be higher than the funding fee for a traditional loan. This one-time charge is due at closing along with any other closing costs.
Make sure you talk to your lender about which loan is best for you and the total closing costs you will need for your loan. The specific terms of a joint VA loan versus a traditional VA loan will vary depending on the lender and borrower’s circumstances.
VA Loans: Entitlements and Joint VA Loans
The VA loan program refers to the amount of money the VA will guarantee on a VA loan as an entitlement. Most active duty and veterans qualify for the full entitlement as long as they have not taken out a VA loan previously or have paid off and sold all homes previously purchased with VA loans.
When two eligible veteran or active service member borrowers apply for a joint VA loan, their entitlements can be combined. This means that the borrowers can purchase a home that is more expensive than either of their individual entitlements could allow without making a down payment.
How are VA Joint Loans different from other VA Loans?
A joint VA loan is just like any other mortgage, except both borrowers are listed on the loan and responsible for repaying the loan. The VA guarantees a portion of the VA-approved borrower’s loan, which means the lender is protected if the borrowers default on the loan. This makes it easier for borrowers to qualify for a joint VA loan, even if they have less-than-perfect credit.
Comparing the VA Loan and Joint VA Loan
| FEATURE | VA LOAN | JOINT VA LOAN |
|---|---|---|
| Down payment requirement | No down payment required | No down payment is required for a qualified VA borrower, non-spouse co-borrowers may need to pay a down payment for their portion of the loan if they are not also a VA-qualified buyer. |
| Interest rates | Lower than conventional mortgages | Lower than conventional mortgages |
| Buying Power | Single Entitlement allows moderate buying power for your home. Find out more about VA loan limits here. | The possibility of using more than one entitlement adds to your buying power for a larger loan. |
| Eligibility | Must be a veteran or service member | At least one borrower must be eligible for a VA loan. Some lenders may not offer joint VA loans that include non-VA eligible co-borrowers. |
| Funding fee | A one-time charge paid at closing | A one-time charge paid at closing, the fee may be higher than for a traditional VA loan |
| Responsibility for loan | Only the borrower | Both borrowers |
VA Joint Loan Unmarried (Or VA Joint Loan Non-Spouse)
Can unmarried couples apply for VA Joint Loans?
Yes, the VA allows non-marital co-borrowers on VA loans. This means that an unmarried couple can apply for a VA loan together, as long as one of the borrowers is a qualified veteran or surviving spouse. Dual military couples who are not married qualify for a joint VA loan and may use one or both of their entitlements towards the loan. Not all lenders allow non-spouse co-borrowers if all co-borrowers are not VA loan eligible, so make sure you ask your lender.
In a VA loan with a non-marital co-borrower who is not eligible for a VA loan on their own, the VA will only ensure the portion of the loan that’s being taken out by the VA-eligible borrower. This means that the non-veteran co-borrower may need to make a down payment on the portion of the loan that’s not insured by the VA. For instance, if you take out a joint VA loan for 200,000 and only one of the co-borrowers is eligible for the VA entitlement, the non-veteran co-borrower will likely pay a down payment of up to 25% of their half of the loan.
What are the VA loan Non-marital Co-Borrower Requirements?
Not all lenders allow non-marital co-borrowers if both borrowers are not qualified active duty or veterans. Those that do usually use these requirements for VA loans with non-marital co-borrowers:
- Both borrowers must agree to be jointly and severally liable for the loan. This means that if one borrower defaults on the loan, the other borrower is responsible for making the payments.
- The property must be used as the primary residence of both borrowers.
VA loans with non-marital co-borrowers can be a good option for unmarried couples who want to buy a home together. However, it’s important to understand the requirements and potential risks before applying for a VA loan with a non-marital co-borrower.
Here are some additional things to keep in mind about VA loans with non-marital co-borrowers:
- The VA requires prior approval for any joint loan where the veteran will hold title to the property with any person other than the veteran’s spouse.
- The VA does not allow joint loans where the non-veteran borrower is using VA benefits.
- The VA sets maximum loan limits for VA loans. The loan limit for a joint VA loan is the same as the loan limit for a single VA loan unless multiple entitlements are being used.
If you’re considering a VA loan with a non-marital co-borrower, it’s important to talk to a VA-approved lender to discuss your specific situation. Reichert Mortgage can help you determine if you’re eligible for a VA loan with a non-marital co-borrower and can help you find a loan that meets your needs.
What disqualifies you from applying for a VA Loan?
There are a few things that can disqualify you from applying for any VA loan. These include:
- Not being a U.S. Citizen or permanent resident of the United States.
- Not having served on active duty/guard/reserve for the amount of time required for the era in which one has served or having been discharged from active duty due to a service-connected disability.
- Having a bankruptcy on your credit report within the past two years.
- Having a foreclosure on your credit report within the past three years.
- Having a debt-to-income ratio that is too high.
- Having a history of late payments or defaults on other loans.
- Having been convicted of a felony in the past seven years.
If you are unsure whether you are eligible for a VA loan, you can contact the VA to inquire and request your certificate of eligibility. The VA may disqualify you from a loan if you have a history of alcohol or drug abuse or have been convicted of a crime of moral turpitude such as fraud, embezzlement, drug trafficking, prostitution, treason, espionage, assault, battery, or murder. The VA may also disqualify you if you are currently facing foreclosure or bankruptcy. Depending on your conviction and rehabilitation, there can sometimes be exceptions to these rules. Contact the VA to inquire about your specific eligibility.
Step-by-Step Guide to Applying for a Joint VA Loan
Step 1: Application
Choose a VA-approved lender on the VA website. Your chosen lender will provide you with a loan application to complete. Fill out the application truthfully to the best of your ability.
Step 2: Documentation
You will need the following documentation:
- A Certificate of Eligibility from the VA
- All financial information for both borrowers including proof of employment, proof of income, tax returns, proof of debt-to-income ratio through bank statements, and credit reports.
- Government Identification for both borrowers.
Step 3: Approval
Undergo a credit check. Your lender will conduct an in-depth credit check. This check often reflects a different number from the basic credit check you can run at home. This credit score will be the one used to approve your loan.
Get pre-approved for the loan. Once the lender has reviewed your application and credit report, they will give you a pre-approval letter. This letter will show you how much you can borrow and what your interest rate will be.
Find a Home
Find a property and make an offer. Once you have been pre-approved for a loan, you can start looking for a property in your approved price range. Once you find a property you like you can get the inspections and assessments required for the approval and make an offer to the seller.
Close the loan. Once the seller accepts your offer you will be able to close the loan. This final step includes paying closing costs, signing all paperwork, and receiving the keys to your new home.
VA Joint Loan FAQs
What down payment is typically required for a VA Joint loan?
Qualifying veterans or service members do not typically need a down payment but will be responsible for the VA funding fee at closing. Non-VA qualified, non-spouse co-borrowers may sometimes be required to pay a down payment for their portion of the loan.
Can a Non-Spouse be on the title of a VA Loan?
If both borrowers qualify for VA loans as current active duty or veteran service members they can both be on the title of the joint VA loan property. Not all lenders allow non-spouse co-borrowers if both are not VA qualified, but those that do may allow a non-spouse to be on the title of the VA loan. The lender may require a down payment from the non-spouse co-borrower in order to put them on the title. Talk to your lender for specific guidelines on how they handle joint VA loans and other loan options if you do not qualify.
Can a Non-U.S. Citizen be on a VA Joint Loan?
A non-U.S. citizen can be a co-borrower on a VA joint loan as long as that person is a legal resident of the United States. Every co-borrower will need to provide valid identification to qualify for the loan.
