Joint VA loan: What it is and how to qualify

What is a joint VA loan?

A joint VA loan is a VA-backed mortgage, or government-backed loan, where the veteran and at least one other person are both liable for the loan and own the home being used as security for the mortgage. That means both clients are responsible for repayment.

A joint VA loan can include several borrower combinations:

• A veteran and one or more non-veterans who aren’t the veteran’s spouse
• A veteran and one or more veterans who won’t use entitlement
• A veteran and a veteran spouse when both spouses use entitlement
• A veteran and one or more other veterans, not spouses, who all use entitlement

A loan with a veteran and spouse isn’t treated as a joint loan if the spouse isn’t a veteran or if the spouse is a veteran but won’t use entitlement. If a veteran and fiancé plan to marry before closing and take title as spouses, the VA treats the loan as a veteran-and-spouse loan, as long as the marriage happens before closing.

Understanding the mix of borrowers on a joint loan helps both the borrower and lender to know how much of the loan the VA is going to guarantee. This can impact whether you need a down payment.

Joint VA loan vs. a traditional VA loan

The main difference between a joint VA loan and a traditional VA home loan is who is applying and whose entitlement is being used.

A traditional VA purchase loan often involves one VA-eligible client or a VA-eligible client and spouse. A joint VA loan usually involves another co-borrower whose relationship or entitlement status changes how the VA guaranty is calculated.

This becomes especially important with a VA loan with a non-spouse. If a veteran buys with a non-spouse co-borrower who isn’t using entitlement, VA generally limits the guaranty to the veteran’s share of the loan. The lender then has to decide whether that limited guaranty meets its requirements or whether a down payment is needed.

Who can get a joint VA loan?

At least one client on a joint VA loan must be eligible for VA home loan benefits and use VA entitlement. The other client, or clients, can vary by scenario. That’s why joint VA loan requirements are so borrower-specific.

The big questions are:

• Is the co-borrower a spouse?
• Is the co-borrower a veteran?
• Will more than one veteran use entitlement?
• Is there a non-veteran co-borrower?
• Will the lender need to account for an unguaranteed portion of the loan?

Down payment is impacted by the use of VA loan entitlement.

Married couples

For VA purposes, a veteran and spouse are treated differently than a veteran and non-spouse co-borrower, as long as VA spousal requirements are met. If both couples have military service backgrounds, they may choose joint entitlement but don’t have to.

Two or more veterans

Two or more veterans can apply together for a joint mortgage. When every veteran on the loan uses entitlement, the VA calculates the maximum potential guaranty based on the total loan amount and then charges entitlement to the veterans.

VA divides the entitlement charge equally when possible. If equal entitlement use isn’t possible, unequal charges may be allowed with the veterans’ written agreement.

Applying with non-veteran co-borrowers

A veteran can apply for a joint VA loan with a co-borrower who isn’t a spouse. This could include an unmarried partner, parent, adult child, sibling, or friend.

Because the VA only guarantees the servicemember or veteran’s portion of the loan, a down payment may come up. The lender may require money down to manage the unguaranteed portion.

Joint VA loan requirements

Joint VA loan requirements depend on the borrower mix, but most scenarios come down to the same core pieces: eligibility, occupancy, credit score, income, debt, documentation, and entitlement. All of these things can impact your monthly mortgage payment.

Clients seeking VA-backed financing must meet VA and lender standards for credit, income, and occupancy. Lenders can also set their own requirements.

Occupancy requirements

VA loan occupancy requirements make clear that the client has to use the home as their primary residence, meaning they live there the majority of the year. All veterans on the loan have to meet these occupancy requirements. Rocket Mortgage does allow for non-veteran, non-occupying co-borrowers. Policies of other lenders may differ.

Credit, DTI, and income requirements

The VA requires satisfactory credit and sufficient income, but private lenders make the loan and may have their own standards. For example, Rocket Mortgage requires at least a 580 credit score.

The other reason for lenders to pull your credit is to get a look at your debts. They’ll evaluate your DTI by comparing your minimum monthly debts to your monthly income. Sometimes you can get away with a slightly higher DTI if you meet VA residual income requirements, meaning you have a certain monthly income after subtracting debts and expenses for your area, based on family size.

On VA joint loans, your income has to be able to cover your portion of the payment, so if the eligible veteran or service member is one of two clients on the loan, they would be expected to cover 50%.

Documentation requirements

Every client should be ready to document identity, income, assets, debts, and credit. For VA loans, also be ready to provide a COE. Lenders may be able to help you expedite getting your COE if you have proof of service.

Common documents may include:

• Government-issued identification
• COE
• Pay stubs
• W-2s/1099s
• Tax returns
• Bank statements
• Documentation for other assets, debts, or income sources

VA entitlement and joint VA loans

VA entitlement is the amount VA will guarantee for the lender if the client defaults. Your COE shows entitlement information. The basic entitlement amount isn’t the amount you can borrow. For loans greater than $144,000, VA generally guarantees up to 25% of the loan amount for clients with full entitlement.

With a joint VA loan, entitlement becomes more detailed because the lender has to determine which client is using entitlement and what portion of the loan VA will guarantee.

How to confirm entitlement with a COE

You can confirm your entitlement by requesting a VA Certificate of Eligibility. A COE confirms for the lender that you qualify for the VA home loan benefit. You can request a COE online, ask your lender to request it through VA’s system, or request it by mail with VA Form 26-1880.

Your COE helps the lender understand your entitlement and whether you have full or partial entitlement. If you have full entitlement, the VA doesn’t set a county loan limit, but your lender still has to approve the loan amount, and the appraisal must support the purchase price. If you don’t have enough remaining entitlement for a 25% VA guaranty, your lender may require a down payment.

Funding fee rules for joint VA loans

While there’s no mortgage insurance and typically no down payment, there’s usually a funding fee associated with VA loans. The only exemptions are for those receiving VA disability, those who return to active duty after receiving the Purple Heart, and eligible surviving spouses.

For non-exempt clients, the VA funding fee for a purchase or construction loan with less than 5% down is currently 2.15% for first use and 3.3% for subsequent use. Reduced funding fee rates may apply with a down payment of 5% or more or 10% or more.

When to use a joint VA loan

“The joint VA loan structure opens the door to homeownership for many veterans across the country who want to buy a home with someone they trust, like a partner, parent, friend, or adult child, even if they’re not married,” says U.S. Air Force veteran John Reuter, a real estate agent and founder of Integrity Homes who specializes in VA loans and helping VA-eligible buyers in Wisconsin.

Pros and cons of a joint VA loan

Let’s run through the benefits and drawbacks. Keep in mind, if the drawbacks are too much, there are other types of mortgages such as a conventional loan or an FHA loan.

Pros

• You can buy with someone who matters to your home buying plan: A joint VA loan can make it possible to buy with an unmarried partner, friend, parent, adult child, or another veteran.
• You may be able to combine financial strengths: Lenders can evaluate the clients’ income and assets according to the VA joint-loan underwriting rules.
• VA-backed loans don’t require PMI: VA-backed purchase loans are nonconforming loans and don’t require PMI or mortgage insurance premiums.
• VA-backed loans may offer competitive terms: VA-backed purchase loans can offer better terms and interest rates than other loans from private lenders, though your actual terms depend on your qualifications and the lender.

Cons

• The VA guaranty may be limited: In veteran/non-veteran joint loans, VA generally guarantees only the veteran’s portion.
• A down payment may be required: If the VA guaranty doesn’t satisfy lender requirements, the lender may require a down payment.
• Prior approval may be required: Joint loans involving a veteran and any person other than the veteran’s spouse must be submitted for VA prior approval.
• Fewer lenders may offer them: Some lenders may choose not to accept veteran/non-veteran joint loan applications because the VA guaranty applies only to part of the loan.
• Shared ownership can get complicated: If the relationship changes, every co-borrower may still be responsible for the mortgage according to the loan terms.
• Entitlement use can affect future VA loan options: Using entitlement on a joint VA loan can reduce available entitlement until it’s restored or otherwise available.

How to apply for a joint VA loan

The joint VA loan process is similar to applying for other mortgages, but the entitlement and guaranty math can be more detailed. The best move is to choose a lender that understands joint VA loan requirements before you make an offer.

1. Choose a VA-approved lender

VA loans are made by private lenders and guaranteed by VA. That means you’ll apply through a lender that participates in the VA home loan program. Rocket Mortgage is proud to offer VA loans to those who have served our country.

2. Gather and provide documentation

Once you choose a lender, each client will need to provide the documents required like bank statements for credit, income, assets, debts, and identity verification. Servicemember and veteran clients also need a COE.

3. Calculate the guarantee and potential costs

If you have a non-veteran borrower, the guarantee for joint loans may be less, so lenders may require a down payment. There are also VA appraisal fees. Additionally, be prepared to pay a total of 3% – 6% in closing costs.

4. Meet the lender’s requirements

The lender will review each client’s credit, income, debts, assets, and documentation. Clients must meet credit, income, and occupancy requirements from VA and the lender.

5. Close on the home

Once the loan is approved, the clients review and sign the final loan documents at closing. After closing, each client is responsible for the mortgage according to the final loan terms.

FAQ

Here are answers to common questions about joint VA loans.

What is the down payment on a joint VA loan?

If all clients are veterans using enough entitlement, a down payment may not be required. If a non-spouse co-borrower isn’t using entitlement, VA generally guarantees only the veteran’s portion of the loan, and the lender may require a down payment for the difference between the guarantee and 25% of the loan amount.

Can an unmarried couple apply for a joint VA loan?

An unmarried couple can apply for a joint VA loan as long as one borrower is VA-eligible.

Can my wife use my VA loan without me?

A spouse can’t apply independently of the veteran unless they qualify through their own service. Those with surviving spouse benefits after being married to someone who died in service or because of a service-connected disability may also be eligible.

Are there loan limits on joint VA loans?

VA doesn’t set county loan limits for clients with full entitlement, but the lender still must approve the loan amount. The home’s appraisal also has to support the purchase price.

If you have partial entitlement, county loan limits can still affect how much you may be able to borrow without a down payment.

Can I get a VA loan if my dad served?

VA loan eligibility doesn’t transfer from parent to child. But you may be able to apply for a VA joint loan together.

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

Yes, a non-U.S. citizen can be on a joint VA loan, but they must have permanent residency and meet the lender’s credit, income, asset, and documentation requirements.

The bottom line: Decide whether a joint VA loan fits your home buying plans

A joint VA loan can help a VA-eligible client buy a home with another veteran or a non-spouse co-borrower. It can be especially helpful when another client’s income, assets, or entitlement supports the home buying plan.

The details matter. Entitlement, VA guaranty, down payment, funding fee, prior approval, and lender requirements can all change based on who is on the loan and who is using entitlement. Before you make an offer, talk with a VA-approved lender about your borrower mix and ask for the guaranty and cost calculations in writing.

Ready to explore your VA loan options? Start your mortgage application online today with Rocket Mortgage.

¹Rocket Mortgage is a VA-approved lender, not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency.

Rocket Mortgage is a trademark or service mark of Rocket Mortgage LLC or its affiliates.