What is a Joint VA Loan?
What are Joint VA Loans and who are they intended for? While a standard VA loan is only available to military members and their spouses, a Joint VA Loan allows co-borrowers who may or may not have VA loan eligibility. This type of loan allows numerous borrowers to pool their funds to buy a home, benefitting from the VA loan program. But there are certain guidelines when it comes to eligibility, down payment, and VA loan entitlement.
What Down Payment Is Typically Required for a VA Joint Loan?
Perhaps the most notable of VA loan benefits is no down payment required. But when a VA-eligible borrower works with a non-eligible co-borrower using a Joint VA Loan, this down payment requirement can shift.
Why the Down Payment on a Joint VA Loan can be impacted by These Factors:
- Veteran’s Share of the Loan: The VA backs only the amount of the loan related to the veteran’s eligibility. And if the co-borrower isn’t VA-eligible, the VA isn’t covering their share of the loan so a down payment is needed.
- Lender Requirements: Some lenders impose their own requirements for down payments, especially if there are non-eligible co-borrowers.
- Loan Amount: If the overall loan amount exceeds the VA loan limits in the area, you may need to make a down payment on the difference.
How Much Down Payment Might Be Required?
- If two qualified VA borrowers apply, usually no down payment is needed.
- When a veteran applies jointly with a non-eligible co-borrower, the lender typically requires a down payment to cover the portion of the loan the VA doesn’t guarantee.
- The specific amount will vary based on the lender’s rules and the veteran’s entitlement.
Joint VA Loan Requirements
Certain eligibility requirements must be met by both the veteran and the co-borrower(s) to qualify for the Joint VA Loan.
Who Can Apply for a Joint VA Loan?
- Two borrowers eligible for a VA loan (like two veterans who are using their entitlement).
- A veteran and spouse (typical VA loan setup).
- A veteran and a non-spouse co-borrower (like a friend, family member, or unmarried partner).
- A veteran and a non-veteran co-borrower (for example, partner or family member who is civilian).
VA Loan Entitlement and Guarantee
- The VA guarantees just the portion of the loan equal to the veteran’s entitlement.
- Entitlement is generally divided if more than one VA-eligible borrower applies.
- Sometimes, a down payment needs to be made if a non-eligible co-borrower is included and unguaranteed loan portions must be covered.
Requirements regarding credit scores and income
- Most VA lenders need at least a 620 credit score, though some may accept even lower scores.
- Poor income stability and a high debt-to-income (DTI) can prevent you from obtaining a loan.
- Even if the co-borrower isn’t VA-eligible, the person must satisfy the lender’s financial criteria.
Joint VA Loan for Unmarried Borrowers
Unmarried partners, friends, or family members looking to purchase that dream home together should consider a Joint VA Loan. But applying for a VA loan as an unmarried co-borrower comes with special considerations.
Major Differences for Unmarried Borrowers
- VA Guarantee Limitations: If one borrower is not VA-eligible the VA only guarantees the veteran’s portion of the loan.
- Down Payment Requirements: As the loan amount is not backed for the ineligible borrower, a down payment might be needed.
- Lender Limitations: Joint VA Loans for separate or unmarried co-borrowers are not available through all VA-Approved lenders. However, it’s important to find a lender that offers such loans.
- Neglecting Legal and Financial Implications: Co-borrowers must delineate ownership percentages and responsibilities in a legal contract to prevent future conflicts.
Are Two Unmarried Veterans Eligible to Apply Together?
Indeed, two unmarried veterans can get a Joint VA Loan. Both can use their VA entitlement in this instance, which generally removes a down payment from the equation.
Joint VA Loan Calculator
A Joint VA Loan calculator can help you see what you and your co-borrower could afford in terms of possible down payments and monthly mortgage costs.
What Is Included in a Joint VA Loan Calculator?
- Loan Amount: Total cost of home.
- VA Entitlement Used: This is the amount of the loan that is offset by the VA guarantee.
- Down Payment: if required, dependent on co-borrower qualifications
- Interest Rate: Estimated from credit score and lender needs.
- Monthly Payments: Principal, interest, taxes, insurance (PITI)
How to Use a VA Loan Calculator for Joint Loans
- Enter the total home price.
- Since this is for VA-eligible borrowers, indicate how many.
- Justifying how much entitlement each borrower is using.
- If necessary, include any down payment.
Using a VA loan calculator before applying helps borrowers understand financial obligations and whether a Joint VA Loan is the best option.
Conclusion
This is a great way for veterans, active duty members, and their co-borrowers to purchase a home together. Most of the times, VA loans are zero down payment loans, but in some cases, the non-eligible co-borrower may also be included in the calculation. “Knowing eligibility requirements, expected credit scores and lender policies is important before applying.” A loan calculator and a VA Approved lender can help you figure out whether a Joint VA Loan assignment works for you.