Most veterans are familiar with VA loans. Eligible veterans, active-duty service members, and certain surviving spouses can use this valuable benefit after meeting the VA’s service requirements. What is less known, but becoming increasingly popular, is having a non-spouse and a non-veteran be a co-borrower on a VA loan. This is known as a joint VA loan.
It is important to note that while a joint VA loan is technically labeled as having multiple borrowers on a single application, the mortgage industry typically uses this phrase when one of the individuals on the loan does not have eligibility and is not married to the VA-eligible borrower. It is important to note that when applying for a VA loan with a spouse, this counts as a single borrowing entity and is technically not a joint loan.
Where joint VA loans differ from traditional VA loans is the down payment requirement. Unless the additional borrower also has eligibility, a down payment is often required, as the VA only guarantees the eligible borrower’s portion of the loan. The exact amount depends on the ownership percentages and the veteran’s existing eligibility. For example, if two borrowers own the property 50/50 and only one borrower has VA eligibility, the minimum required down payment is typically 12.5%.
The main pros of doing a joint VA loan include the following:
- Excellent VA mortgage rates
- No monthly mortgage insurance
- More flexible income requirements
- Increased purchasing power
The main cons of doing a joint VA loan include the following:
- A down payment is often required
- An upfront funding fee may apply
- Potential legal and financial risk should the relationship with the other party deteriorate
- Uses some or all of the veteran’s entitlement until the loan is repaid
Regardless if you are looking to purchase a home with another eligible veteran, a spouse, an unmarried partner, a friend, or a family member, there are options for veterans using VA financing.
If you have questions about getting pre-approved, give us a call at (760) 930-0569, and one of our Licensed Loan Originators will be happy to help.
