VA loans are a fantastic choice for eligible Veterans, designed to make homeownership more attainable by offering benefits like no down payment and more lenient credit requirements.
A VA-eligible borrower can pursue a traditional VA loan alone, with a co-signer or a co-borrower who is a spouse or another veteran. But what happens when a VA-eligible borrower wants to take on a mortgage with someone who isn’t their spouse or a veteran?
In these scenarios, borrowers would need to consider a joint VA loan.
Key Points:
- Joint VA loans enable veterans to combine their purchasing power with non-spouse, non-veteran co-borrowers, such as friends, family members or unmarried partners.
- These loans share many benefits with traditional VA loans, including no down payment for the veteran, competitive interest rates, no PMI, flexible credit requirements and limited closing costs.
- Joint VA loans can be especially useful for unmarried couples, multiple families buying a multi-family home and veterans wishing to buy a house with a non-veteran co-borrower.
- Despite their advantages, joint VA loans come with added complexities, such as additional documentation, entitlement allocation, shared responsibility, occupancy requirements and potentially higher costs.
- Understanding when to use a joint VA loan helps veterans take full advantage of homeownership opportunities, whether co-investing in property, assisting family members or combining resources to afford a larger home.
What is a Joint VA loan?
A joint VA loan is a government-backed mortgage involving a VA-eligible borrower and another individual, such as a non-spouse co-borrower. While traditional VA loans only apply to veterans and their spouses, a joint VA loan allows veterans to co-borrow with another individual of their choosing.
While this loan option offers more flexibility regarding homeownership possibilities, joint VA loans also have additional complexities that borrowers should be aware of when considering this loan type compared to a traditional co-borrower or co-signer scenario. For example, standard VA loans don’t require a down payment, while joint VA loans require a down payment for the co-borrower’s portion of the loan.
Joint VA Loans vs. VA Loans with a Co-Signer or Co-Borrower
A VA-eligible borrower can qualify for a VA loan with another individual in three ways:
- With a co-signer
- With a VA-eligible co-borrower
- With a joint VA loan
Review the table below to compare each of these borrowing scenarios and determine which option is best for you:
| Criteria | Co-Signer | VA-Eligible Co-Borrower | Joint VA Loan |
|---|---|---|---|
| Who is Eligible? | Spouse or unmarried military member | Spouse or other Veteran | Non-spouse, non-Veteran |
| Role | Provides additional creditworthiness and guarantees if the primary borrower defaults | Shares responsibility for the loan | Shares responsibility for the loan |
| Liability | Partial liability | Full liability | Full liability |
| Income Consideration | May be considered | Considered in determining loan eligibility | Considered in determining loan eligibility |
| Impact on Credit | Credit is impacted by missed payments or default on the loan | Equal impact on credit | Equal impact on credit |
| Property Rights/Ownership | No ownership or right to the property | Joint ownership and right to the property | Joint ownership and right to the property |
| Impact on Loan Qualification | Creditworthiness may be used to supplement primary borrower | Financial information considered for both borrowers | Financial information considered for both borrowers |
Pros and Cons of Joint VA Loans
Joint VA loans come with many of the same benefits as traditional VA loans, such as:
- No down payment is required for the veteran’s portion
- Competitive interest rates
- No private mortgage insurance (PMI)
- Flexible credit requirements
- Limit on closing costs
Despite these benefits, joint VA loans come with some added complexity, which we’ll explain further below.
If you’re considering a joint VA loan, evaluating both the positive and negative aspects of this loan type before submitting your application is important.
See the table below for a quick overview of the pros and cons of joint VA loans:
| Pros of Joint VA Loans | Cons of Joint VA Loans |
|---|---|
| Easier to qualify | Can be more complicated than traditional VA loans |
| Qualify for larger loan (greater borrowing power) | Potential conflicts between borrowers |
| Shared responsibility | May require down payment for non-guaranteed portion of loan |
Joint VA Loans vs. Traditional VA Loans
The primary distinction between a traditional VA loan and a joint VA loan lies in the eligibility and involvement of the borrowers.
Borrower Eligibility:
- Traditional VA Loan: Veteran and spouse.
- Joint VA Loan: Veteran and any non-spouse, non-military co-borrower.
Loan Guarantee:
- Traditional VA Loan: The entire loan is guaranteed by the VA.
- Joint VA Loan: Only the veteran’s portion is guaranteed by the VA, potentially requiring a down payment for the non-guaranteed portion (more on “portions” below)
Approval Process:
- Traditional VA Loan: Generally simpler and faster, with standard VA loan requirements.
- Joint VA Loan: More complex, with stricter underwriting and additional documentation needed for both borrowers.
Financial Impact:
- Traditional VA Loan: Benefits from full VA backing, which can make terms more favorable.
- Joint VA Loan: Involves additional financial scrutiny and potential for higher costs due to the non-VA-guaranteed portion.
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Joint VA Loan Requirements
When applying for a joint VA loan, the veteran and the co-borrower must meet several requirements. These requirements ensure that both parties can fulfill the loan obligations and that the property meets VA standards. Many of these requirements are similar to those of traditional VA loans, but there are additional considerations for joint loans.
Requirements for Both Parties
- Credit and Debt-to-Income (DTI) Ratios: Both the veteran and the co-borrower must meet the lender’s credit score and DTI ratio requirements. Lenders typically look for a credit score of at least 620 and a DTI ratio of 41% or lower, though these thresholds can vary.
- Property Eligibility: The property being purchased must meet the VA’s Minimum Property Requirements (MPRs), which ensure that the home is safe, structurally sound and sanitary. Check our guide to VA loan property eligibility to learn more.
- Occupancy Requirements: The veteran borrower must live in the home as their primary residence. This means that the property cannot be used solely as an investment property or vacation home.
- Income and Employment Verification: Both parties must provide proof of stable income and employment to demonstrate their ability to repay the loan. This includes pay stubs, tax returns and other financial documents.
Requirements for the Veteran
- Certificate of Eligibility (COE): The veteran must obtain a Certificate of Eligibility from the VA, which verifies their eligibility for the VA loan benefit. This can be obtained online, through a lender or by mail.
- Sufficient Entitlement: The veteran must have sufficient entitlement available to cover their loan portion. The entitlement is the amount the VA will guarantee on the loan, which can affect the maximum loan amount. Check out our guide to VA entitlement for more information.
Requirements for the Co-Borrower
- Legal Residency: The co-borrower must be a legal U.S. resident, although they do not need to be a veteran or servicemember.
Common Joint VA Loan Borrowing Scenarios
Veterans can bring any non-spouse, non-veteran co-borrower onto the joint VA loan application. Here are some of the most common joint VA loan borrowing scenarios:
- Unmarried Couples Buying a Home Together: For veterans in a committed relationship but not legally married to a civilian, a joint VA loan allows them to combine their incomes and credit profiles to qualify for a home loan. This makes it easier to purchase a property that is out of reach based on a single income.
- Multiple Families Buying a Multi-Family Home: Veterans looking to purchase a multi-family property (up to four units) with friends or family members can use a joint VA loan to share the costs and responsibilities. This arrangement can provide affordable housing options while also generating rental income from the additional units.
- Buying a Home with a Non-Veteran Co-Borrower: Veterans who want to buy a home with a friend, sibling or other non-veteran co-borrower can benefit from a joint VA loan. This allows them to leverage the VA loan benefits while including the co-borrower’s income and credit history to improve loan eligibility.
- Combining Resources to Afford a Larger Home: For veterans looking to purchase a larger or more expensive home than they could afford, a joint VA loan allows them to pool financial resources with a co-borrower. This can help them qualify for a higher loan and secure a more desirable property.
- Helping a Family Member Achieve Homeownership: Veterans who want to assist a family member, such as an adult child or parent, buy a home can use a joint VA loan. This way, they can provide support while ensuring that both parties share the responsibilities and benefits of homeownership.
- Co-Investing in Property for Future Value: Veterans who see real estate as a valuable investment opportunity might partner with another investor to purchase a property. A joint VA loan can facilitate this partnership, allowing both parties to benefit from the property’s potential appreciation. Note: the property must be at least one borrower’s primary residence for at least one year.
By understanding when to use a joint VA loan, veterans can take full advantage of the unique opportunities these loans provide, making homeownership more accessible and collaborative.
Down Payment for Joint VA Loans
The VA’s coverage of a joint VA loan will only extend to the eligible veteran’s portion. As a result, lenders may require the non-veteran co-borrower to contribute a down payment to offset this increased risk.
The size of the required down payment will vary by lender, but most lenders will typically require a 12.5% down payment for the loan segment that the VA does not back.
How is Each Borrower’s Portion Determined?
In a joint VA loan, the borrowers’ portions are specified in the loan agreement based on the agreement between the borrowers and the lender. This means that one borrower can be responsible for a larger portion of the loan than the other.
This should be documented clearly, and the borrowers should understand that they’re each still responsible for the full loan amount. We recommend consulting with a qualified attorney or financial advisor to discuss your situation and ensure you understand your obligations and rights under the loan agreement.
Joint VA Loans and Entitlement
Joint VA loans impact the veteran borrower’s entitlement just like traditional VA loans. However, in a joint VA loan, only the veteran’s portion counts towards the entitlement, not the whole loan. So, in some cases, there may be less impact on entitlement since the financial responsibility is being spread out across multiple parties.
How to Apply for a Joint VA Loan
The application process for a joint VA loan is straightforward and similar to the typical VA loan application process.
To get started on your joint VA loan journey, follow these simple steps:
- Determine eligibility: Confirm that the borrowers meet the requirements described above.
- Choose VA lender: Not every lender will support joint VA loans, so verify their offerings beforehand.
- Gather financial documentation: Collect and prepare all necessary financial documentation requested by your lender for you and your co-borrower. The lender can obtain some of the documentation, like the COE.
- Prequalification/preapproval: Apply for prequalification and/or preapproval with your chosen VA lender. This preliminary assessment will show how much you could borrow based on your and your co-borrower’s financial information.
- Property selection and appraisal: Once pre-approved, search for a suitable property within your price range. After selecting the property, arrange an appraisal to estimate its value for loan purposes.
- Complete mortgage application: With your appraisal done, you can complete the full mortgage loan application. Include all the required details for both co-borrowers on your joint VA loan.
- Loan processing: After receiving the application, the lender will process it and evaluate the risk of offering you and your co-borrower the loan.
Approval and closing: Once your joint VA loan is approved, you and your co-borrower will sign all the final paperwork and begin your new home ownership journey. Learn more about VA loan closing costs with our guide.
More Reading
Guide to VA Appraisal Fees and Process
VA Loan Appraisal and Inspection Requirements
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Robert Paul says
May my daughter and I use the VA JOINT MORTGAGE application process under the following circumstances:
Father is a veteran, daughter is not. Daughter would be the primary resident in the house to be purchased, father would not have this house as a primary residence as father currently has an active VA mortgage that is his primary residence and that is being paid back monthly over a period of thirty years.
Ryan Guina says
Robert, Joint VA Loans are more complicated than traditional VA Loans. I don’t want to give a partial answer based on the information available in this question (and not knowing the full situation). I recommend bringing this question to a lender that specializes in VA Loans. They will be best able to help answer your questions based on your specifics and help you understand how much of your VA Loan benefit remains, how much of a down-payment may be required, and the risks involved for you, since your name would be on the loan. An experienced VA Lender can also help you coordinate required paperwork and help you through the entire home-buying process. Best wishes!