The Complete Guide to VA Loan Co-Borrowers and Co-Signers

Many Veterans who utilize the VA loan do so with another applicant. It often makes sense for prospective homebuyers to want or need another applicant on their VA loan. Using another person's income, credit score and debt level can do wonders for loan qualification.

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 co-signers, 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 live in the home and 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 your loan needs to meet the 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 quick look at joint VA loans.

Joint VA Loans

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 loans 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).

Most of the time, joint loans wind up requiring a down payment to account for the part the VA doesn’t guarantee. The amount depends on a few factors, including entitlement and the home's price.

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 will 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 a spouse or eligible Veteran on the loan with you 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 also split your entitlement evenly or combine the remaining entitlement of one borrower from a previous VA home loan with the remaining entitlement of the other borrower.

If your co-borrower is also a Veteran or a service member with VA loan entitlement, you may want to take a closer look at dual entitlement options for military couples pursuing VA home loans.

Scenario 4: Non-Occupant Co-Borrower

A Veteran whose entitlement is being used on the loan and their spouse currently live in Georgia and the Veteran has been offered a job in Missouri, causing them to purchase another home in Missouri. The spouse will not immediately move to Missouri with the Veteran as she must stay in Georgia another five years for employment reasons.

At Veterans United, if the Veteran plans to live in the home and the spouse’s income is reliable, the loan may move forward.

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.