Joint VA loan: What it is and how to apply

*Rocket Mortgage currently only allows joint VA loans on VA IRRRLs (refinance loans), as long as the non-spouse was previously obligated on the loan or title when the prior loan closed.

VA loans, insured by the Department of Veterans Affairs (VA), are an attractive mortgage option because they require no down payment. The challenge, however, is that not everyone can get a VA loan. To qualify, you must be a member or veteran of the U.S. military or an unmarried, surviving spouse of a veteran.

That is unless you apply for a joint VA loan.

A joint VA loan is a mortgage with more than one person. One of the borrowers must meet the military requirements for a VA loan. The other borrower doesn't need to be a member of the military or a veteran.

What is a joint VA loan?

With a joint VA loan, two or more borrowers, including at least one who is a member or veteran of the U.S. military or an unmarried, surviving spouse of a veteran, apply for a VA loan together.

All borrowers are responsible for the monthly mortgage payments of the government-insured loan.

Why are joint VA loans beneficial?

Joint VA loans are a good option for qualified applicants who don’t want to pay a down payment. VA loans don’t require any down payment. As long as one of the borrowers has qualifying military service or is a surviving spouse of a veteran, no down payment is necessary for their part of a joint VA loan. However, the nonmilitary co-borrower may be required to make a down payment on their portion of the loan.

VA loans are also attractive because they are nonconforming loans. A nonconforming loan doesn't meet the standards set by the government-sponsored enterprises: Freddie Mac and Fannie Mae. Because the government partially insures every VA loan, lenders can be more relaxed with their loan requirements because they’re protected from losses if a borrower defaults on their loan. The government’s guarantee to loan investors is why you don't need a down payment for a VA loan and why you may qualify for a VA loan 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.

Types of borrowers for joint VA loans

A joint VA loan works for three common types of borrower scenarios:

• One borrower qualifies for a VA loan and applies with one or more borrowers who don’t.
• Two or more borrowers qualify for a VA loan, and all the applicants use their VA entitlement.
• Two or more borrowers qualify for a VA loan, but not all applicants use their VA entitlement.

If you’re applying with your spouse, you don’t need to apply for a joint VA loan. Married couples are counted as one entity for VA loans, even if only one applicant has qualifying military service. Each spouse will be responsible for repaying the VA loan, and spouses can choose to count both their incomes when applying.

With a joint VA loan, two or more borrowers – at least one VA-approved borrower and one nonmilitary borrower – apply for one VA loan. As mentioned, because it is a joint loan, all borrowers are responsible for monthly mortgage payments.

VA entitlements and joint VA loans

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

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

As of 2020, borrowers with full VA loan entitlements have no limit on how much they can borrow, even if they make no down payment. For these borrowers, the VA will pay lenders up to 25% of the total loan amount if they stop making their mortgage payments.

Most veterans or active-duty service members qualify for the full entitlement if they've never taken out a VA loan before or paid off a previous VA loan and sold the home they purchased with the loan.

When two or more borrowers who qualify for VA loans apply together, not every borrower has to use their VA entitlement. If two VA-approved borrowers apply for a joint VA loan and only one borrower uses their VA entitlement, the Department of Veterans Affairs will only guarantee 25% of the portion of the loan covered by the borrower who used their entitlement.

How do joint VA loans differ from other VA loans?

The big difference between a joint VA loan and a traditional VA home loan depends on the combination of applicants for the loan. If a veteran or active-duty military member is applying with an unmarried, nonmilitary borrower, lenders may require a down payment. In most cases, the nonmilitary borrower will need to make a down payment on the portion of the loan that isn’t insured by the Department of Veterans Affairs.

The VA only guarantees the portion of the loan that’s covered by the borrower who qualifies for VA benefits. This increases the risk of the overall loan. To cover the risk, lenders may ask for a down payment from the borrower who does not qualify for VA loan benefits or isn’t using their VA loan benefits.

Pros and cons of a joint VA loan

As with all mortgage types, a joint VA loan has pros and cons.

Pros

• You might qualify for a larger loan, allowing you to buy a more expensive home by combining incomes and 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 qualify for VA financing, you won’t need to make a down payment.

Cons

• If you take out a joint VA loan with a borrower who doesn’t qualify for VA benefits, that borrower may need to make a down payment.
• You will pay the VA funding fee (unless you qualify for a funding fee waiver). If you’re taking out your first VA loan and not making a down payment, your VA funding fee will be3% of your total loan amount.

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

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 offer VA loans.

1. Choose a lender and complete an application

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. And you’ll need to submit a Certificate of Eligibility (COE) as well.

2. Gather documentation

Lenders will want copies of certain financial documents to verify your income. They may request copies of your two most recent pay stubs, 2 months of bank account statements and your last 2 years of tax returns.

3. Meet the requirements

To qualify for a VA loan, you’ll generally need a FICO® credit score of at least 580 with Rocket Mortgage. Your monthly debts, including your new estimated mortgage payment, should equal no more than 43% of your gross monthly income.

4. Verify your savings

You should also have money saved up. Lender requirements will vary, but most lenders will want you to have enough savings to cover at least two mortgage payments in case you lose your job or your monthly income decreases.

Joint VA loan FAQs

If you still have questions about joint VA loans, you’re not alone. Here are some of the most frequently asked questions about joint VA loans.

Can an unmarried couple apply for a joint VA loan?

Yes, an unmarried couple can apply for a joint VA loan. Whether it’s two friends or a brother and sister applying for a mortgage, the application won’t be treated any differently. And lenders will consider the income of both applicants.

Are there loan limits on joint VA loans?

While there are loan limits on joint VA loans, you may qualify for a bigger loan if you apply with a co-borrower rather than on your own.

Can a non-U.S. citizen be on a joint VA loan?

In some instances, a non-U.S. citizen may apply for a joint VA loan if they are a legal resident.

What are the VA loan co-borrower requirements?

Co-borrowers on a VA loan must meet the same financial requirements the other loan applicants must meet. Co-borrowers who don’t qualify for a VA loan may need to make a down payment to cover their portion of the loan.

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 may 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 you make a down payment – and the number of times you’ve taken out a VA loan in the past, the VA funding fee may be the determining factor that helps you decide which loan type is best for your situation. Disabled veterans, among others, are eligible for a funding fee waiver, so ask us if you aren’t sure if you qualify for a waiver.

Ready to apply for a joint VA loan? If so, start your mortgage application online today with Rocket Mortgage^®.