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 by themselves, with a co-signer or with a co-borrower that 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.
What is a joint VA loan?
A joint VA loan is a government-backed mortgage involving a VA-eligible borrower and a non-spouse, non-Veteran co-borrower. While traditional VA loans only apply to Veterans and their spouses, a joint VA loan opens the door for Veterans to co-borrow with another individual of their choosing.
While this loan option offers more flexibility in terms of 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.
Joint VA Loans vs. VA Loans with a Co-Signer or Co-Borrower
There are three different ways a VA-eligible borrower can qualify for a VA loan with another individual: co-signers, VA-eligible co-borrowers and joint VA loans.
Review the table below to compare each of these borrowing scenarios and determine which option is best for you:
|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|
Common Joint VA Loan Borrowing Scenarios
When it comes to joint VA loans, Veterans are able to bring any non-spouse, non-Veteran co-borrower onto the loan application. Here are some of the most common joint VA loan borrowing scenarios:
- VA-eligible borrower and a parent
- VA-eligible borrower and another family member
- VA-eligible borrower and their unmarried partner
- VA-eligible borrower and a close friend/roommate
Down Payment for Joint VA Loans
The VA’s coverage of a joint VA loan will only extend to the eligible Veteran’s portion of the loan. 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 VA lenders will typically require a 12.5% down payment for the segment of the loan that the VA does not back.
Benefits of Joint VA Loans
Joint VA loans offer distinct added benefits to those typically associated with traditional VA loans. One of the most significant benefits is their ability to increase a borrower’s likelihood of qualifying for a loan. Having an additional borrower on their joint VA loan application can improve their chances of qualifying, especially for VA-eligible borrowers who have poor credit history or a lower income level.
Similarly, another benefit of joint VA loans is the possibility of securing a larger loan amount. Since the joint loan application considers multiple sources of income and credit, borrowers are generally capable of qualifying for more significant loan amounts. Ultimately, this widens the borrowers’ range of potential properties and allows them to purchase a more expensive home.
Pros and Cons of Joint VA Loans
If you’re considering a joint VA loan, it’s important to evaluate both the positive and negative aspects of this loan type before submitting your application.
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|
How to Apply for a Joint VA Loan
Now that you’re an expert on the fundamentals of joint VA loans, you may be wondering how to apply for one yourself. The good news is the application process for a joint VA loan is fairly straightforward and relatively 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 at least one borrower meets the VA’s qualification criteria.
- Select a co-borrower: Choose a trustworthy and financially-stable individual to be your co-borrower. This could be a friend, family member, long-term partner or another individual who is not a Veteran or spouse.
- Choose VA lender: Not every lender will support joint VA loans, so be sure to verify their offerings beforehand.
- Gather financial documentation: Collect and prepare all necessary financial documentation requested by your lender for both you and your co-borrower.
- Prequalification/preapproval: Apply for prequalification and/or preapproval with your chosen VA lender. This preliminary assessment will provide an idea about 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 now complete the full mortgage loan application. Be sure to 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 associated with 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.