A VA loan co-signer can help you qualify
VA home loans have relatively lenient requirements. Minimum credit scores start between 580 and 640; there’s no down payment required; and VA lenders can be flexible about your existing debts.
But still, some VA-eligible borrowers might not qualify for a loan due to financial flaws, credit score issues, or debt-to-income ratio problems.
The good news is that you’re allowed to get a VA loan co-signer to help your cause. Just note, this person will likely need to be your spouse and/or another VA-qualified borrower.
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Can you have a co-signer on a VA loan?
If a mortgage lender tells you that you need a co-signer for a VA loan application, it means they will not provide financing based solely on your own income and credit history.
The lender may want another person on the loan who will promise to repay the mortgage loan if you cannot.
That’s where a co-signer comes in handy. 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 permitted to have a co-signer on a VA home loan. But this person must occupy the home with you. And, they must either be:
- Your spouse; or
- A veteran or active-duty service member (someone eligible for a VA loan, in other words)
“With VA mortgages, the co-signer must also be qualified 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 required to pay back the loan on behalf of you, the primary loan borrower, should you default and fail to pay back the loan as scheduled.”
Perlman notes that a co-signer’s credit, like yours, will be negatively affected if the VA loan goes past due or in default.
That means co-signing is serious business. Both parties should fully understand the implications of co-signing a VA loan as well as the benefits.
VA loan co-signer vs. co-borrower
Note that a VA loan co-signer and a co-borrower are not the same thing.
A co-signer serves to guarantee your debt if you cannot qualify for a VA loan by yourself. This person helps you get approved for the loan and serves as a second line of defense should you run into financial troubles.
A co-borrower, on the other hand, typically shares responsibility for the mortgage payments and shares in the benefits of homeownership as well (for instance, owning a portion of the home’s equity). 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 assist in qualifying for and strengthening the VA loan. A co-borrower can either be your spouse or another veteran or active duty military borrower,” adds Perlman.
“A co-signer takes responsibility for the debt should the borrower default, but this person is not added as a titleholder.”
Non-occupant VA loan co-signers
There’s a big difference between VA loan co-signers and co-signers on other mortgage programs, like conforming loans.
With a VA loan, the person co-signing your mortgage must live in the home with you. You can’t ask someone living in a separate house — like a parent or relative — to help you qualify.
“According to the VA, non-occupant parties are not allowed to co-sign on a VA loan,” says Tanja Allen, Senior loan officer with Fairway Independent Mortgage Corp.
The same is true of a co-borrower: This person has to live in the home with you as his or her primary residence.
Married VA loan co-borrowers and co-signers
Husbands or wives of veterans and active-duty service members can be a co-borrower or co-signer on the VA home loan.
In fact, when you need a joint VA loan, the most common and easy scenario is to apply with your spouse. But it’s important to know what’s 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 have the responsibility of repaying the debt if the primary borrower defaults,” says Perlman.
Say there are two eligible veterans on the loan: one being the spouse and one being the primary veteran.
Perlman says they can split the entitlement amount used, and/or the other veteran’s entitlement can be used for another property if they want to purchase a second home.
Unmarried VA loan co-borrowers
An unmarried partner who will also live with you in the home as their primary residence is usually not allowed to be a co-signer on the loan or be a co-borrower with their name on the mortgage.
The VA technically permits this, but most lenders do not.
However, even if the lender allows a non-spouse in on the deal, “the guarantee that the VA provides, which essentially covers your down payment, would be reduced to half,” Allen notes.
That means the VA is only backing a portion of the loan, and you’d need a down payment to shore up the lender’s cash requirement.
“For example, if a married couple with a VA loan purchases a home for $200,000, the VA typically ensures 25% of this 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 down payment of 12.5% ($25,000) to make up the shortfall on the VA guaranteed amount.”
Therefore if you can qualify on your own, you might be better off doing so in order to take advantage of your full zero-down VA home loan benefit.
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 active duty service during wartime, 181 active-duty service days during peacetime, or six service years in the National Guard,” says Eric Nerhood, owner of Premier Property Buyers.
A Certificate of Eligibility (COE) verifying your military service history is required. Lenders can easily request this document for you when you apply.
You also need to 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-to-income ratio (DTI)
- Savings or assistance to cover the VA funding fee* and other closing costs
*Note, the VA funding fee can 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 instance, a higher DTI might be allowed if you have good credit and/or substantial savings. Or, if you have low credit, some VA lenders will work with you to get your score up to qualifying levels.
VA loan co-signer FAQ
Yes. You are allowed to have a co-signer on a VA home loan. But this person must occupy the home with you and either be: (a) your spouse; or (b) a former or current member of the military.
In most cases, only a veteran/service member or spouse can be a co-borrower or co-signer on a VA loan.
The only parties who are allowed to be on the title for a VA home loan are either: (a) the veteran/service member; (b) a veteran/service member and this person’s spouse; (c) two veterans/service members; or (d) if allowed, a veteran/service member and a non-veteran/service member, which will require a down payment of 12.5% to make up for the shortfall on the VA guaranty amount. All parties listed on the title must live in the home as their primary residence.
No, you cannot use your VA benefit to purchase a home for someone else. The home can only be purchased for a veteran or service member under their name, along with their spouse or another veteran/service member. “When you purchase a home as a veteran or military member, you must occupy the home within 60 days of closing,” says Tanja Allen with Fairway Independent Mortgage Corp.
Yes. Two veterans can purchase a home together using their VA loan benefits. “The VA will charge the entitlement equally to each veteran,” says Tanja Allen with Fairway Independent Mortgage Corp. “Or, if one veteran does not have enough entitlement remaining, the other veteran can agree to have more of the entitlement charged against their entitlement.”
The VA doesn’t set a minimum credit score requirement for borrowers. But VA loan 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.
Do I qualify for a VA home loan?
The Department of Veterans Affairs tries 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 to 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 whether you qualify.