So, you’re single, eligible for a VA Home Loan, and eager to buy a house — but you’re worried that you might not be able to afford what you want. And you’re on the fence because of a sluggish housing market. That isn’t necessarily bad news for you as a buyer. However, it is for those sellers watching home prices dip. The lower prices could signal a course correction for a housing market that has enjoyed bountiful sales and profits for the past several years. What’s worrying some homebuyers, though, are those pesky rising mortgage interest rates that don’t look as if they’re going down any time soon.
As a potential buyer, you’re left with a couple of choices that might feel like you’re on a never-ending see-saw. Do you wait the market out, hoping prices drop further? That could allow you to get more for your money. Or do you scramble to lock in interest rates before they climb even higher? What you don’t want to do is not buy at all because owning real estate is still one of the surest ways to invest in your financial future.
If you’re flexible, you might have a money-saving option you haven’t considered — a joint VA Home Loan. Let’s take a closer look at the joint VA Loan and see if it’s a viable choice.
What is a joint VA Loan?
A joint VA Loan lets two or more people be on a VA Home Loan together as long as one of those applicants is an eligible Veteran, active-duty servicemember, or surviving spouse.
Who is responsible for paying the mortgage on a joint VA Loan?
Each person on the loan shares equal responsibility.
Who can apply for a joint VA Home Loan?
One or more unmarried civilians can apply as co-borrowers with qualified military
applicants. Also, multiple qualified military members can apply together.
Does the Veterans Administration guarantee the non-military borrower?
No. The Department of Veterans Affairs only insures the portion of the loan the VA-eligible borrower takes out. Note that joint VA Loans are riskier for lenders, and some may ask for a down payment only for the portion of the loan not backed by the VA.
Do all borrowers have to live in the home?
Yes. Each borrower on a joint VA Loan must use the property as their primary residence. So, for instance, you and a group of friends can’t buy a vacation lake house to use as a short-term rental. On the other hand, joint VA Loans allow VA-eligible borrowers to pool their income, allowing them to afford homeownership.
If I’m in the military and married, do I still apply for a joint VA Loan?
No. Married couples with one spouse eligible for a VA Home Loan can apply for a standard loan because the VA considers them one entity. One purpose of the joint VA Loan is to allow military and non-military persons to purchase homes jointly.
Can two or more VA-eligible applicants apply for a joint VA Home Loan?
Yes, multiple VA-eligible applicants can apply with only one using their entitlements. Conversely, two or more VA-eligible applicants can apply for a joint VA Loan, and all applicants can use their entitlements to purchase a property. In the latter case, when several military borrowers apply together, each borrower’s funding fee and entitlement is equally divided, and each borrower has to meet the minimum credit requirements.
When should you opt for a joint VA Loan?
Let’s say you have a debt-to-income ratio (DTI) higher than the 41% or less that most lenders prefer. But you really feel this is the time for you to purchase a house. You’re open to shared living and financial arrangements – maybe with a family member or friend. If that potential co-borrower comes to the table with a lower DTI ratio, it could lower the final ratio for the loan.
Another reason to consider a joint VA Loan is if your income won’t allow you to qualify for a VA Loan. Adding a trusted co-borrower would hike up the income needed for the loan.
Do I need a Certificate of Eligibility (COE) for a joint VA Loan?
Absolutely. Every VA Loan begins with the borrower obtaining a Certificate of Eligibility. Your COE will list the amount you’re entitled to borrow. Ask your lender to help you get your COE.
Can a partner get on my VA Home Loan?
Yes, you can put your unmarried partner on your joint VA Home Loan. But remember, if the person isn’t VA-eligible, they will have to provide a down payment for their part of the loan.
Final word
As you can see, a joint VA Home Loan is a viable option for those who want to combine their incomes and other resources to purchase a home. But it comes with some limitations, so it’s not for everyone. You’re buying a home with someone who isn’t your spouse, and you both have to make that home your primary residence. Do your due diligence and know your co-borrower well.
