VA Mortgage Loans
When veterans apply for a VA Mortgage Loan, they have different loan options to choose from. They can either take out a VA Loan themselves, or they can try to get a VA Joint Loan. If the VA Loan is for a home that costs more than the maximum allotted price for homes in their county, the veteran or qualified military personnel can also choose to take out a VA Jumbo or Super Jumbo loan.
The VA Joint Loan option has become popular because the spouse or additional person serves as a co-signer or co-borrower. Joint VA Loans between a qualified applicant and his or her spouse can be fully guaranteed by the VA.
Veterans can also take out Joint VA Loans with another eligible veteran to purchase a home, and those loans can be fully guaranteed as well. The VA will divide the entitlement charge between the two of them. Qualified applicants can elect to get a Joint VA Loan with a non-veteran or spouse, but in those cases the VA will not fully guarantee the loan. The only portion of the loan guaranteed by the VA is that which is allocated to the veteran.
Co-signers for Joint VA Loans
- Spouses of qualified veterans and applicants
- Other eligible veterans
- Third parties
Benefits of Joint VA Loans
Veterans often choose a Joint VA Loan over a regular VA Loan because their co-signer may have better credit. Just like any loan that’s co-signed between two people, both parties are able to use their income and credit information together. For a loan applicant with extremely poor credit or some reasons they might not be able to get such a good rate on their loan, a Joint VA Loan can be an excellent way to get terms they wouldn’t be able to otherwise receive.
Joint VA Loans with Non-Veterans
Because Joint VA Loans with a third party other than a spouse or qualified military personnel aren’t fully guaranteed by the VA, many lenders require a down payment on the third party’s portion of the loan. Lenders do this because if the veteran’s home goes into foreclosure or he or she defaults on the loan, the lender is at risk of not receiving their money back. Therefore, some lenders choose not to accept Joint VA Loans with third parties.
Purchasing a home with another person is an enormous commitment, so make sure you have thought everything out beforehand. Take your co-signers credit, income, and ability to pay their part of the loan back into consideration prior to taking on a legally binding contractual agreement with them.
Steps to Take for a Joint VA Loan
If you intend to apply for a Joint VA Loan in the future, checking both your debt-to-income ratio and that of your co-signer is a wise idea. Ideally, you would want to look at the ratio as well as credit scores and other factors a good year before applying for a Joint VA Loan. That way, should any credit problems crop up, you can deal with them and have the time to dispute any errors on your credit report before applying for the loan.
Aspects of Joint VA Loans
Two different facets of Joint VA Loans set them apart from other loans. First, the veteran has to show they make enough income to cover their part of the Joint VA Loan. The third party co-signer cannot take on all or most of the financial responsibility of the loan. Secondly, the lender has to submit the Joint VA Loan to the VA and wait for its approval before they can issue the loan.
While Joint VA Loans can be a bit more complicated than traditional VA Loans, they still offer the same benefits at VA Loans and can be extremely worthwhile under the right circumstances.