Joint VA Loan: What It Is and How to Apply
Backed by the U.S. Department of Veterans Affairs (VA), a joint VA loan allows military borrowers to enjoy the qualification and financing benefits of a traditional VA loan, while bringing in other borrowers to purchase or refinance a shared home. Because these loans are issued to multiple people and may include non-military borrowers, they can be a useful tool for those with less-than-ideal finances to become homeowners.
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What is a joint VA loan?
A joint VA loan allows two or more people to pool their resources together and apply for a mortgage guaranteed by the VA, with only one of them needing to meet the necessary military requirements.
A perk of military service, VA loans provide military service members, veterans and eligible spouses with more favorable financing terms and relaxed qualification hurdles than conventional mortgages. That’s because if a borrower goes into mortgage default, the VA will cover a portion of that outstanding loan.
These loans typically don’t require a down payment or mortgage insurance, don’t charge a penalty if you pay it off early and limit lender fees to 1% of your loan amount. Like other government-backed loans, they are considered non-conforming, meaning they don’t follow the rules set by the Federal Housing Finance Agency.
To be eligible for a VA loan, you must be either an active-service military member, a veteran, a National Guard member, a Reserve member or the surviving spouse of a service member who either is missing in action or died while serving. Additionally, military members must meet a minimum service requirement and have been discharged under conditions other than dishonorable. Any VA loan applicant will also need to clear certain credit and income standards.
Joint VA loan vs. traditional VA loan
A joint VA loan features at minimum two borrowers, while a traditional VA loan has a single borrower. (A military member and their non-military spouse are viewed as one by the VA.) Since the VA will only back the portion of the loan belonging to the military borrower, joint VA loans that include a non-military borrower typically require a down payment.
So, non-military borrowers should prepare to put down an amount equivalent to the VA’s guarantee, which can be up to $36,000 for home loans less than $144,000 or 25% of the loan amount if the home costs more.
Who can get a joint VA loan?
Joint VA loans can involve three different combinations of borrowers:
→ Military borrower with one or more non-military borrowers
→ Two or more military borrowers using their entitlements
→ Two or more military borrowers with not all applicants using their entitlement
Military borrower with one or more non-military borrowers
In this situation, only one applicant meets the military eligibility requirements for obtaining the home loan. This means the VA will only back the military borrower’s portion of the mortgage, and any non-military borrower, who could be the military member’s unmarried partner or relative, may be required to make a down payment.
Two or more military borrowers using their entitlements
Because all applicants are military members or veterans, the VA will back each borrower’s share of the mortgage. That’s because each military member gets a VA loan entitlement, or a certain amount of money the VA will pay a lender if they default on the home loan. Military borrowers without a current VA loan have access to their full entitlement, but those who’ve used a VA loan in the past may only have a partial entitlement, potentially limiting the amount the VA will guarantee.
The VA prefers to tap each borrower’s entitlement equally when backing mortgages, but it will do unequal divisions of entitlement with the written permission of each veteran.
Two or more military borrowers with not all applicants using their entitlement
Despite the fact that all applicants meet the military eligibility requirements needed, the VA views this scenario as akin to those who apply with non-military borrowers. That’s because one or more of these borrowers is forgoing their VA entitlement benefit, meaning their portion of the loan won’t be backed by the VA, just like a non-military applicant’s wouldn’t be.
A military member may not have their VA entitlement to use if they’re still paying off another VA loan or they defaulted on a previous VA loan. Lenders may also require a down payment in this situation.
Things you should know: Military borrowers and spouses
When to use a joint VA loan
A joint VA loan makes sense in several scenarios:
- You don’t have the income to qualify on your own. If you apply with other eligible military or non-military borrowers, they can help you qualify with their income.
- You have too much debt to qualify on your own right now. Lenders prefer a 41% debt-to-income (DTI) ratio or lower, although they sometimes make exceptions. All your debt counts toward this ratio (including student loan payments). If you apply with another eligible military borrower with less debt and/or a higher income, that could bring down your DTI ratio.
- Your VA entitlement is used on another home. If your current home has a VA loan and you need to buy a new home before selling it, your entitlement will be reduced or eliminated. If you have a partial entitlement, borrowing with another military borrower who has a full entitlement will ensure more of the home loan is guaranteed by the VA.
- You want to purchase a multifamily home with more than four units. With military VA loan co-borrowers, you can buy a four-unit property with one family unit for each military participant and one business unit. For example, two military borrowers could purchase a six-unit property with one business unit.
How to qualify for a joint VA loan
You’ll need to follow these steps to qualify:
1. CONFIRM YOUR ELIGIBILITY
You’ll need to obtain your certificate of eligibility (COE) through the VA. This document confirms to lenders that you qualify for this home loan benefit.
2. VERIFY YOUR ENTITLEMENT
If you’ve never used your home loan benefit or your previous VA loan has been paid in full, you have your full entitlement. Your COE will list your entitlement.
3. KNOW YOUR FUNDING FEE
VA funding fee guidelines state that if you make less than a 5% down payment and it’s your first use of your VA loan benefit, the funding fee is 2.3% of the loan amount. After the first use, the fee increases to 3.6% if the down payment is less than 5%. Opting to make a larger VA loan down payment will reduce your funding fee.
4. KNOW MINIMUM VA LOAN REQUIREMENTS
While the VA doesn’t have a minimum credit score requirement, most lenders usually want to see a 620 minimum. VA loans typically don’t require mortgage insurance or a down payment.
How to apply for a joint VA loan
Once you’ve reviewed the qualification requirements and obtained your COE, you can apply for a joint VA loan with any approved VA mortgage lender. The VA recommends you shop around to secure the best loan, as different banks, mortgage companies and credit unions charge varying interest rates and fees.
Pros and cons of joint VA loans
You’ll need to carefully weigh whether a joint VA loan is the right call for you and your fellow borrowers before applying for and taking on such a large debt. Here are some key things to consider:
| Pros | Cons |
|---|---|
You can qualify for a loan more easily with additional borrowers, particularly if you have a lower income and high debt. You can buy a more expensive home than you could on your own since the income of all borrowers is considered. You'll only pay lender fees worth 1% of your loan amount. You don’t need to purchase any mortgage insurance and may not need a down payment. | You could pay a VA funding fee worth as much as 3.6% of your loan amount. You may have to make a down payment if your co-borrower is non-military or a service member or veteran who isn't using their entitlement. You’ll need to involve other owners in decisions about selling or refinancing. You may tie up your entitlement, making it harder to purchase another property using VA benefits in the future. |
Frequently asked questions
Yes, couples who are unmarried can apply for a joint VA loan. The military status of both partners will affect whether the VA will back both borrowers’ portion of the loan and if a lender will require a down payment.
Typically, lawful permanent residents and non-permanent residents qualify for most mortgage programs in the U.S., so adding one as a borrower to a military borrower’s application should work. If the non-citizen is the one providing the military eligibility to get a VA loan, they will have to meet service requirements and have lawful residence status. Widows or widowers of eligible service members who aren’t U.S. citizens may also qualify for a VA loan on their own or be added to a joint VA loan.
The loan limit rules are the same for both joint and traditional VA loans. Those with full entitlement have no loan limits, while those with a partial entitlement will have loan limits applied. In this case, a borrower’s limit is based on local conforming loan limits and equates to 25% of the limit, minus the share of entitlement already used.
It’s important to remember that the VA loan limit doesn’t cap the amount you can borrow to finance your home purchase. It applies only to the amount the VA guarantees if you stop making mortgage payments.
Yes, you can apply for a joint VA loan with a non-married partner, provided one of you meets the military service requirements necessary to qualify.