Can You Have a Cosigner on a VA Loan?

American flag and wooden key with VA loan written on itNavigating the complexities of VA loans often raises issues concerning co-signers and co-borrowers. Prospective homebuyers often ask, "Can a VA loan have a cosigner? " and "Can you have a co-signer on a VA loan?

Understanding the subtleties is critical for individuals looking at this home financing option. While VA loans usually do not demand a down payment or mortgage insurance, having a co-signer may affect the qualifying and approval process. Exploring the VA loan cosigner standards and the potential of utilizing a co-borrower illuminates the alternatives open to veterans and active-duty service people.

This knowledge of co-signing and co-borrowing provides a thorough awareness of how VA loans may suit various financial conditions.

Understanding Cosigning for VA Mortgages

  • Cosigning a VA mortgage can benefit borrowers with limited credit history or income.
  • The primary borrower and the cosigner are responsible for making timely mortgage payments.
  • The primary borrower's credit history affects eligibility and interest rates.
  • Understanding the co-borrower's rights and responsibilities before cosigning a VA mortgage is essential.

VA Loan Cosigning Eligibility Requirements

Veterans who qualify for a VA mortgage loan may include a cosigner on their loan application. However, the cosigner must live in the house with the Veteran: & the cosigner must be one of the following:

  • The spouse of the Veteran, or   
  • An active-duty service member or Veteran

Additionally, the cosigner must be eligible and qualify for the loan.

The cosigner is responsible for repaying the loan on behalf of the Veteran if the primary borrower defaults on the loan and does not have any ownership interest in the property that is the subject of the mortgage loan.

The co-signers credit score, monthly income, and debt-to-income ratio are considered when a cosigner is helping the Veteran purchase a home. The debt-to-income ratio refers to how much of the primary borrower and cosigner's gross monthly income goes toward paying off debts. Insufficient credit for either the primary borrower or cosigner may jeopardize the loan application.

Clarifying Cosigner vs. Co-Borrower Roles

Understanding the difference between a cosigner and a co-borrower regarding mortgages is essential. Here are three key points to keep in mind:

  • A cosigner agrees to take on the responsibility of the loan if the primary borrower defaults. They don't have any ownership interest in the property.
  • On the other hand, a co-borrower is equally responsible for repaying the loan and has ownership rights to the property.
  • A cosigner can benefit borrowers with limited credit history or income when applying for a VA loan. However, both parties need to meet specific criteria set by Veterans Affairs.

When considering a joint VA loan application, mortgage lenders will evaluate your credit history and repayment ability. Remember that being a cosigner carries responsibilities, so ensure you fully understand your obligations before entering such an arrangement.

Key Considerations for Joint VA Loan Applicants

Consider your credit history and repayment ability when applying for a joint VA loan. A joint VA loan allows co-borrowers to purchase a home together and live in the home as their primary residence.

With a joint VA loan, both borrowers can take advantage of the benefits offered by the VA loan program. Finding reputable VA lenders experienced with this type of loan is essential.

Both co-borrowers will be responsible for making mortgage payments on time. The primary borrower's credit history will play a significant role in determining eligibility and interest rates.

Before deciding to get a VA loan with a cosigner, ensure you fully understand your rights and responsibilities and those of the co-borrower.

Steps to Apply for a Joint VA Loan

To apply for a joint VA loan, you should carefully consider this type of mortgage's eligibility requirements and benefits. With a joint VA loan, you can share the responsibility and benefits of homeownership with another person. Here are three key things to know about cosigning a VA loan:

  • Cosigner on a VA loan: A cosigner agrees to take on responsibility for the loan if the borrower cannot make payments. This can be helpful if one borrower has lower credit or income.
  • Joint VA loan unmarried: You don't have to be married to apply for a joint VA loan. Available partners or friends can qualify if they meet all other eligibility requirements.
  • VA loan cosigner requirements: The cosigner must also meet specific qualifications, including having sufficient income and creditworthiness.

Eligibility Implications for One Veteran Applicants

If two unmarried people cosign on a VA mortgage loan, only one of them may be eligible for the VA loan guarantee as a service member, Veteran, or surviving spouse of a veteran. This means that the VA loan guarantee will only cover the value of the eligible person's share of the home.

The cosigner who is not eligible may still help qualify for a loan, but a 12.5% down payment will likely be required. Remember that the person on loan, whether a cosigner or co-borrower, can play an essential role in helping you qualify for a VA loan.

Navigating VA Loan Eligibility for Unmarried Partners

Unmarried partners living in the property as their primary home are not permitted to cosign or co–borrow (unless they meet the initial conditions). Even though the VA allows an unmarried partner on loan, most lenders do not.

But even if the lender agrees to include a non–spouse on the mortgage, the VA guarantee, which essentially pays the down payment, would be cut in half. This means the VA will guarantee will only cover a part of the loan, and the Veteran will be required to make a down payment to satisfy the lender's 25% guarantee.

For example, if a married couple obtains a VA loan and purchases a property for $200,000, the VA typically guarantees 25% of the purchase price. However, when a veteran/service member applies for a VA loan with an unmarried non-veteran applicant, the VA guarantees only 12. 5 percent of the loan.  

 In the previous example, the Veteran would need a down payment of 12.5 percent ($25,000) to cover the difference between the VA purchase price and the guaranteed loan amount. Because of the VA loan program guidelines, an FHA loan might be more suitable if the applicant needs a co-signer.

Exploring Joint Home Purchase Options for Veterans

Two veterans can combine their VA loan benefits to purchase a home. The VA will charge an equal portion of the loan entitlement to each Veteran's account. If one Veteran has used up their full entitlement, the other can agree to have more charges against theirs.

This is an excellent option for home buying using a VA loan, especially for applicants with limited loan eligibility. Apply for a VA loan or VA mortgage and take advantage of this VA mortgage benefit.

The VA Loan Application Process Simplified

You'll find that applying for a VA loan is straightforward and stress-free. Here's what you need to know:

  • VA Loan Eligibility: Ensure you meet the VA loan requirements before applying. This includes being a current or former member of the military and meeting specific service-length needs.
  • Qualifying for a VA Loan: You must meet specific income and credit score criteria to qualify. The lender will also consider your debt-to-income ratio to ensure you can comfortably afford the mortgage payments.
  • VA Loan Application: Applying for a VA loan is simple. You'll need to gather some documents, such as proof of income and military service records, and submit them with your application. The entire process can be done online or through an approved lender.

Understanding Co-Borrower Eligibility for VA Loans

Applying for a VA loan with a co-borrower can benefit those who may not meet all the eligibility requirements. The Department of Veterans Affairs allows unmarried co-borrowers to use together as long as one is eligible for the loan. A cosigner can help offset any bad credit history and increase your chances of approval. However, it's important to note that both borrowers are equally responsible for repaying the loan and meeting all its obligations.

If you're wondering about VA loan cosigners, you might have questions like, 'Can you have a cosigner on a VA loan?' or 'What are the VA loan cosigner requirements?' The good news is you can have a cosigner on a VA loan.

Conclusion: The Significance of Cosigning a VA Mortgage

You are now aware of the specifics involved in cosigning a VA mortgage. Although it could seem overwhelming, it can be a simple procedure if you have the proper knowledge.

You may oppose it because cosigning might jeopardize your credit. You may reduce possible hazards by carefully choosing a competent borrower and being active in the loan process.

Don't let this objection prevent you from assisting someone using a VA loan to fulfill their goal of becoming a homeowner.

Cosigner (joint loan) on a VA Loan 

Recommended Reading:
VA Loans: 0% Down Payment and No PMI Required
VA Manufactured Home Loan Calculator 

VA Mortgage Insurance: What You Need to Know