The Complete Guide to VA Loan Co-Borrowers, Co-Signers and Joint VA Loans

Many Veterans who utilize the VA loan do so with another applicant. It often makes sense for prospective homebuyers to want or need a co-borrower or joint applicant on their VA loan. Utilizing another person's income, credit score and debt level might do wonders for their ability to qualify for a loan.

However, not all co-borrowing scenarios are easy, and some may be harder than others. Below we break down everything a Veteran should know about VA loans with multiple applicants, including common co-borrower scenarios and co-borrower requirements.

VA Loan Co-Borrower Requirements

A co-borrower on a VA loan typically includes the Veteran and their spouse but may also include another Veteran who isn't their spouse.

Co-borrowers on VA loans must meet the same financial guidelines as other VA loan applicants. In some cases, this can help. In other cases, it may hurt. Counting someone else's income can come at a cost — you're at the mercy of their credit and financial profile. Every applicant on the loan with you needs to meet VA's and lender's requirements for things like minimum credit score, debt-to-income ratio and more.

VA-Approved Co-Borrowers

The VA typically allows a max of four borrowers on any loan. For co-borrowing, this includes:

• A Veteran and non-veteran spouse
• Two married Veterans where only one Veteran uses their entitlement
• Two married Veterans where both Veterans use a portion of their entitlement
• Two non-married Veterans where both Veterans use a portion of their entitlement.

The VA doesn't expressly prohibit non-spousal co-borrowers, otherwise known as a joint VA loan. In those instances, the agency tells VA lenders that it will only guarantee the eligible borrower's portion of the home loan. That leaves a chunk of the mortgage without the government backing the program relies upon.

Does that mean you can't secure a VA loan with your fiancé or fiancée, your long-time significant other or your civilian neighbor? No.

Let's take a deeper look at joint VA loans and their requirements.

Joint VA Loan Requirements

Lenders, including Veterans United, provide joint VA loans for Veterans and non-spouse, non-veteran co-borrowers. For example, if a Veteran got a VA loan with their brother, parent, or unmarried significant other, that's a joint VA loan.

Joint VA loan scenarios are absolutely possible, but they look different from a typical VA purchase loan. They're different because the VA's guaranty extends only to the Veteran's portion of the loan (half in most cases).

That means joint loans wind up requiring a down payment, unlike most other VA loans. Just how much depends on a few factors, including entitlement and the home's price. Joint VA loans can get complicated in a hurry, which is why it's best to talk to a home loan specialist.

Outside of the down payment, the Veteran's income must be sufficient to repay their portion of the loan.

Common VA Loan Co-Borrowing Scenarios

Let's look at some VA loan co-borrowing scenarios and how they might play out in your VA loan process.

Scenario 1: VA-Eligible Borrowers and Unmarried Partners

Some co-borrowers will be subject to more financial scrutiny than others. If you plan to co-borrow with an unmarried partner or friend who'll live in the home with you, plan on needing money for a down payment. Remember that the VA will only guarantee the VA-eligible borrower's portion of the loan. This also applies to VA refinancing.

Scenario 2: VA-Eligible Borrower and Spouse

Having on the loan with you a spouse or eligible Veteran who will also live in the home doesn't trigger any down payment needs. Being able to purchase with $0 down is a significant financial benefit of the VA loan and one that nearly 8 in 10 VA buyers took advantage of last year alone.

Scenario 3: Two Married or Unmarried VA-Eligible Borrowers

Two eligible Veteran borrowers have some options when it comes to using their VA home loan benefits. You can use all of one borrower's entitlement and save the other for future use. You can split your entitlement evenly, or you can combine the remaining entitlement of one borrower from a previous VA home loan with the remaining entitlement of the other borrower.

You can read an in-depth look at VA lending for military couples in our previous post: VA Loan Entitlement Options for Military Couples

Dual Entitlement

If your co-borrower is also a Veteran or a service member with VA loan entitlement, you may want to have a more in-depth conversation about how to approach using your entitlement.

Check out another article where we take a closer look at dual entitlement options and military couples pursuing VA home loans.

VA Refinance and Co-Borrowers

Co-borrower relationships can get tricky post-purchase, too.

For example, if a couple purchases a home with a VA loan and then experiences a divorce, the civilian spouse is not automatically eligible to refinance the home with a VA loan.