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Joint VA Loan: What It Is And How To Apply

Dan Rafter6-minute read

September 19, 2022

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VA loans, insured by the U.S. Department of Veterans Affairs, are an attractive mortgage option because they require no down payment. The challenge, though, is that not everyone qualifies. You'll need to be a member or veteran of the U.S. military or the unmarried widow of a veteran to qualify for one of these loans.

Unless you apply for a joint VA loan.

A joint VA loan is a mortgage made out to more than one person. One of the people taking out the loan must meet the military requirements of a VA loan. The other borrowers, though, don't need any military history.

What Is A Joint VA Loan?

In a joint VA loan, two people, including at least one who is a member or veteran of the U.S. military or the unmarried widow of a veteran, apply together for a VA loan.

Both people who apply for this government-insured loan are responsible for the monthly payments.

Joint VA loans are a good option for applicants who don’t have enough or don’t want to come up with the money for a down payment. Traditional VA loans don’t require any down payment. The borrower who has military service, or is a widow of a veteran, won’t have to make a down payment. However, if this borrower is applying with a co-borrower who does not have the military history to qualify for a VA loan on his or her own, that second borrower might have to come up with a down payment on his or her half of the loan.

VA loans are also attractive because they are an example of a non-conforming loan. A non-conforming loan doesn't meet the standards set by government-sponsored enterprises Freddie Mac and Fannie Mae. Because the government insures at least part of every VA loan, lenders can be a bit looser with their requirements as they are taking on less financial risk. It's why you don't need a down payment for a VA loan and why you might qualify for one of these loans with a lower FICO® credit score.

Lenders can also use the income of all applicants when determining whether to approve or reject an application for a joint VA loan.

A joint VA loan can include three main combinations:

  • One person who qualifies for a VA loan can apply with one or more people who do not.
  • Two or more people who qualify for a VA loan with all applicants using their VA entitlements.
  • Two or more people who qualify for a VA loan with not all applicants using their VA entitlements.

It’s important to note that you don’t need to apply for a joint VA loan if you are applying with your spouse. Spouses are counted as one entity for the purposes of VA loans, even if only one applicant has military service. Both spouses will be responsible for repaying the VA loan, and spouses can choose to count both of their incomes when applying.

In a joint VA loan, two or more borrowers – with at least one, but not necessarily all, applicants meeting the military service requirements of these loans – apply for one VA loan. Because it is a joint loan, all borrowers are responsible for the monthly mortgage payments.

VA Entitlements

To understand joint VA loans, you need to understand VA entitlements.

A VA entitlement is the amount the Department of Veterans Affairs will guarantee on your VA loan. It's the maximum number of dollars that the VA will pay your lender if you stop making your mortgage payments and default on your loan.

As of 2020, borrowers with full VA loan entitlement aren't limited in how much they can borrow even if they put up no down payment. For these borrowers, the VA will pay lenders up to 25% of the loan amount if borrowers stop making their payments.

Most veterans or active-duty members of the military qualify for this full entitlement if they've never taken out a VA loan before or if they've paid off a previous VA loan in full and sold the home that loan was used to buy.

When two or more people who qualify for VA loans apply jointly, not every borrower has to use his or her VA entitlement. If two people are applying and just one decides to use the VA entitlement, the Department of Veterans Affairs will only repay the lender 25% on one half of the loan amount – the amount the military member or veteran using his or her entitlement is responsible for – if the borrowers default on the loan.

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How Do Joint VA Loans Differ From Other VA Loans?

The big difference between a joint VA loan and a traditional VA loan depends on the combination of applicants for the loan. If a veteran or active-duty military member is applying with an unmarried non-military borrower, lenders might require a down payment. In most cases, the non-military borrower will have to come up with a down payment on the half of the loan that is not insured by the Department of Veterans Affairs.

This happens because the Department of Veterans Affairs is only guaranteeing the portion of the loan that is being taken out by the borrower who qualifies for VA benefits. This increases the risk of the overall loan. To cover this risk, lenders might ask for a down payment for the borrower who does not qualify for VA loan benefits.

Pros And Cons Of A Joint VA Loan

As with all mortgage types, there are pos and cons with a joint VA loan.

Pros

  • You might qualify for a larger loan, allowing you to buy a more expensive home. That’s because you can use the incomes of more than one borrower, boosting your spending power.
  • You can take out a loan with a friend or family member.
  • If you take out a joint VA loan with one or more borrowers who also qualify for VA financing, you won’t have to come up with a down payment.

Cons

  • If you take out a joint VA loan with a borrower who does not quality for VA benefits, that borrower might have to come up with a down payment.
  • You will have to pay the VA funding fee. If you are taking out your first VA loan and not making any down payment, your VA funding fee will come out to 2.3% of your loan amount.

If you don’t like these drawbacks, you might consider applying for other types of home loans, including a conventional, which requires a down payment of just 3% of your home’s purchase price, or an FHA loan. Depending on your credit score, you can get an FHA loan with a down payment of 3.5% of your home’s purchase price.

How To Apply For A Joint VA Loan

Although VA loans are insured by the Department of Veterans Affairs, you’ll need to meet with a private mortgage lender to apply for these loans. Fortunately, most lenders do work with VA loans.

When you meet with a lender, you’ll fill out a loan application, providing your full name, Social Security number and previous addresses. You’ll also give your lender permission to check your credit. You’ll need to obtain a certificate of eligibility as well.

Lenders will want copies of certain financial documents so that they can verify your income. This could include copies of your two most recent paycheck stubs, two months of bank account statements and last 2 years of your tax returns.

To qualify for a VA loan, you’ll generally need a FICO® credit score of at least 620. Your monthly debts, including your estimated new mortgage payment, should equal no more than 43% of your gross monthly income.

You should also have money saved up. Lenders vary, but most will want you to have enough savings to cover at least two mortgage payments. This offers lenders financial protection in case you lose your job, or your monthly income is otherwise reduced.

Can An Unmarried Couple Apply For A Joint VA Loan?

An unmarried couple can apply for a joint VA loan. Such an application won’t be treated any differently than if two friends or a brother and sister are applying for a mortgage. Lenders will consider the incomes of both applicants.

The Bottom Line: Find Out Whether A Joint VA Loan Is Right For You

If you’ve served in the military or are currently on active duty, a joint VA loan might be the right choice for you. When applying for a home loan, it’s important to learn more about VA loan closing costs. Depending on the size of your down payment – if any – and the number of times you’ve taken out a VA loan in the past, the VA funding fee could be a determining factor on which loan type is best for your situation.

Find out how much you can afford.

Your approval amount will give you an idea of the closing costs you’ll pay.

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Dan Rafter

Dan Rafter has been writing about personal finance for more than 15 years. He's written for publications ranging from the Chicago Tribune and Washington Post to Wise Bread, RocketMortgage.com and RocketHQ.com.