The VA has a special reception and specific set of rules for borrowers on a joint loan that differs from any of their loan programs. Knowing these rules will help you gain a better understanding about this option if you’re looking to get financing via one.
VA joint loans defined
A VA joint loan refers to loans that are given to eligible veteran applicants who are applying with another veteran or non-veteran individual.
Broken down, the following setups are all considered joint loans:
- Taken by a veteran and a non-veteran who is not the veteran’s spouse
- Taken by two veterans but only using one entitlement
- A veteran and his or her veteran spouse – both use their entitlements
- Non-spouse veterans both using their entitlements
A loan taken by a veteran with a non-veteran spouse, however, is not considered a joint loan.Get VA loan rates today!
Joint Loan Underwriting
The underwriting process of a VA joint loan is similar to any other borrower-co borrower setup. Both parties may use their financial profiles to qualify for the loan.
The only aspect of their finances that will not function jointly is the credit rating. A high rating does not compensate for the other applicant’s bad rating.
Are there any occupancy requirements?
A regular VA loan requires its mortgagor to live in and use the home as his or her primary residence.
This, however, takes a different form in joint loans.
Here, the veteran is still required to live in the property, but the non-veteran partner or the veteran partner who did not use his or her entitlement to obtain the loan is not required to occupy the property.
How is my VA Guaranty Limit determined?
A VA Guaranty refers to the amount of the loan backed by the VA. This amount is paid to the lender in the event that the borrower defaults on the loan.
Typically, this amount is about a quarter of the overall loan amount. But the calculation gets tricky with joint loans. To avoid confusion, follow the following steps:
- Determine the loan amount
- Divide the whole total with the number of borrowers on the loan
- With the resulting figure above, multiply by the number of veteran borrowers on the loan
- With the second resulting figure, you can now determine your Guaranty Limit using the guidelines below:
- For loans up to $45,000, the guaranty is up to 50 percent of the loan amount;
- If your determined loan amount is between $45,001 and $56,250, the guaranty is up to $22,500;
- For loan amounts between $56,251 and $144,000, the guaranty is 40 percent of the loan amount (max $36,000);
- Amounts between $144,001 and $417,000 will have a guaranty of 25 percent of the loan amount; and
- For loans greater than $417,000, the guaranty limit is the lesser of 25 percent of the loan limit of the county or 25 percent of the loan amount
Applying for a VA loan with a non-spouse co-borrower is not uncommon among veterans. There’s not really much difference from a spouse-partnered financing. Whichever is the case, it’s a helpful option for veterans who need help with qualifying for the loan.Click to See the Latest Mortgage Rates»