Who can co-sign a VA loan?

A VA loan co-signer can help you qualify

VA Home Loans have relatively lenient requirements. Minimum credit scores start between 580 and 640; no deposit is required; and VA lenders can be flexible on your existing debts.

However, some VA-eligible borrowers may not be eligible for a loan due to financial problems, credit rating issues, or debt-to-income ratio issues.

The good news is that you are allowed to get a VA loan co-signer to help your cause. Just note that this person will likely need to be your spouse and/or another qualified VA borrower.

Check Your VA Loan Eligibility (January 19, 2022)

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Can you have a co-signer on a VA loan?

If a mortgage lender tells you that you need a cosigner for a VA loan application, that means they won’t provide funding based solely on your own income and credit history.

The lender may want another person on the loan who will promise to pay off the mortgage if you can’t.

This is where a co-signer is very convenient. This person can help you qualify for the mortgage if your personal finances don’t quite meet a lender’s requirements.

Who can co-sign a VA loan?

Fortunately, you are allowed to have a co-signer on a VA home loan. But this person must occupy the house with you. And, they must be either:

  • Your partner; Where
  • A veteran or active duty member (a person eligible for a VA loan, in other words)

“With VA mortgages, the co-signer must also qualify for the loan,” explains Michael Adam Perlman, Assistant Vice President of Silver Fin Capital Group.

“The co-signer, in general, is a responsible party to the loan being repaid. This person will be responsible for repaying the loan on your behalf, the primary borrower, if you default and do not repay the loan as scheduled.

Perlman notes that the credit of a co-signer, like yours, will be negatively affected if the VA loan is past due or in default.

This means co-signing is serious business. Both parties should fully understand the implications of co-signing a VA loan as well as the benefits.

Check Your VA Loan Eligibility (January 19, 2022)

VA loan co-signer vs. co-borrower

Note that a VA loan co-signer and one co-borrower are not the same thing.

A cosigner serves to secure your debt if you cannot qualify for a VA loan on your own. This person helps you get loan approval and serves as a second line of defense if you run into financial trouble.

A co-borrower, on the other hand, typically shares responsibility for mortgage payments and also shares the benefits of home ownership (eg, owning some of the equity in the home). A co-borrower is also added to the title while a co-signer is not.

“A co-borrower’s income, credit and assets are used to help qualify and strengthen the VA loan. A co-borrower can be either your spouse or another veteran or active-duty military borrower,” Perlman adds.

“A co-signer assumes responsibility for the debt in the event of borrower default, but that person is not added as a title holder.”

Non-occupant VA loan co-signers

There is a big difference between co-signers on VA loans and co-signers on other mortgage programs, like conforming loans.

With a VA loan, the person who co-signs your mortgage must live in the house with you. You cannot ask someone who lives in a separate house – such as a parent or relative – to help you qualify.

“According to the VA, non-occupying parties are not allowed to co-sign a VA loan,” says Tanja Allen, head of loans at Fairway Independent Mortgage Corp.

The same goes for a co-borrower: this person must live in the accommodation with you as their main residence.

Married VA loan co-borrowers and co-signers

Husbands or wives of veterans and active duty military can be co-borrowers or co-signers of the VA home loan.

In fact, when you need a joint VA loan, the most common and easiest scenario is to apply with your spouse. But it is important to know what is involved here.

“When acting as a co-signer, the spouse’s income is not used to qualify for the loan. Rather, they are used more for liability purposes, whereby the spouse will be responsible for repaying the debt if the primary borrower defaults,” says Perlman.

Suppose there are two eligible veterans on the loan: one being the spouse and the other being the primary veteran.

Perlman says they can split the amount of entitlement used and/or the other veteran’s entitlement can be used for another property if they wish to purchase a second home.

Apply for a VA loan with your spouse (January 19, 2022)

Unmarried VA Loan Co-Borrowers

An unmarried partner who will also be living with you in the home as your primary residence is generally not permitted to be a co-signer on the loan or be a co-borrower with their name on the mortgage.

The VA technically allows this, but most lenders do not.

However, even if the lender allows a non-spouse to participate in the agreement, “the security provided by the VA, which essentially covers your down payment, would be cut in half,” Allen notes.

This means that the VA only guarantees part of the loan and you would need a down payment to meet the cash flow needs of the lender.

“For example, if a married couple with a VA loan purchases a home for $200,000, the VA typically insures 25% of that amount. But when the loan is for a veteran/service member and an unmarried non-veteran, the VA will only guarantee 12.5% ​​of the loan,” Allen explains.

“This would require a 12.5% ​​($25,000) down payment to make up the shortfall on the guaranteed VA amount.”

Therefore if you can qualify on your own, you might be better off in order to take full advantage of your VA home loan benefit with no down payment.

Your VA Loan Eligibility

Remember that certain requirements apply to you — the primary borrower — as well as your co-signer or co-borrower.

“To qualify for a VA loan as a veteran or service member, you must have served at least 90 consecutive days of wartime active duty, 181 days of peacetime active duty, or six years of service. in the National Guard,” says Eric Nerhood, owner of Premier Property Buyers.

A Certificate of Eligibility (COE) attesting to your military service history is required. Lenders can easily request this document for you during your application.

You must also meet loan program requirements, including:

  • A credit score above 580-620 (varies by lender)
  • A two-year history of steady income and employment
  • A reasonable debt ratio
  • Savings or help to cover VA financing costs* and other closing costs

*Note that VA financing fees may be rolled into the loan amount rather than paying upfront.

The VA mortgage program is flexible when it comes to many of these criteria.

For example, a higher DTI may be allowed if you have good credit and/or substantial savings. Or, if you have poor credit, some VA lenders will work with you to bring your score up to qualifying levels.

Check Your VA Loan Eligibility (January 19, 2022)

VA Loan Cosigner FAQ

Can you get a VA loan with a co-signer?

Yes. You are allowed to have a co-signer on a VA home loan. But that person must occupy the accommodation with you and either: (a) your spouse; or (b) a former or current member of the military.

Can I get a VA loan with someone who is not my spouse?

In most cases, only a veteran/service member or their spouse can be a co-borrower or co-signer on a VA loan.

Who can be on title with a VA loan?

The only parties permitted to appear on title to a VA home loan are either: (a) the veteran/service member; (b) a veteran/service member and that person’s spouse; (c) two veterans/service members; or (d) if authorized, one veteran/service member and one non-veteran/service member, which will require a 12.5% ​​deposit to make up the shortfall in the VA amount. All parties listed on the title must live in the home as their primary residence.

Can I use my VA benefit to buy a house for someone else?

No, you cannot use your VA benefit to buy a home for someone else. The home can only be purchased for a veteran or service member under their name, as well as their spouse or another veteran/service member. “When you buy a home as a veteran or military member, you must occupy the home within 60 days of closing,” says Tanja Allen of Fairway Independent Mortgage Corp.

Can two veterans buy a house together?

Yes. Two veterans can buy a home together using their VA loan benefits. “The VA will bill each veteran equally for the fee,” says Tanja Allen of Fairway Independent Mortgage Corp. .”

What credit score do I need for a VA loan?

The VA does not set a minimum credit score requirement for borrowers. But VA lenders do. “The lender will determine if you can be approved for VA financing based on your credit score. A typical score for successful VA home loan applicants is at least 640,” says Michael Hamelburger, CEO of The Bottom Line Group.

Am I eligible for a VA home loan?

The Department of Veterans Affairs is doing its best to make this program available to military home buyers at all financial levels.

Credit score and income requirements can be flexible, and low interest rates help make mortgage payments more affordable.

So even if you don’t have an eligible VA loan co-signer, it’s worth checking with a lender to see if you’re eligible.

Check your new rate (January 19, 2022)

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