There are some circumstances in which a borrower may seek a cosigner for their home loan. Perhaps they have considerable debt, bad credit, or low income. Traditional loans allow borrowers to have cosigners, but what about VA loan requirements? Can you have a cosigner on a VA mortgage and if so, what standards are they required to meet? Here’s what you need to know.
Can I Have a Cosigner on My VA Loan?
You are allowed to have a co-borrower or cosigner on your VA loan. However, it’s important to note that these are two distinctly different things. Cosigners are individuals who do not live in the home, but can be held financially responsible for the loan. Co-borrowers are individuals who live in the home, share ownership of the property, and are on the mortgage. Both cosigners and co-borrowers must meet the same financial requirements as any VA loan applicant.
Acceptable co-borrowers for VA loans include:
- A non-Veteran spouse
- A Veteran spouse who does not use their entitlement
- A Veteran spouse who uses their entitlement
- A Veteran who is not your spouse (both of you must use your entitlement)
- A non-Veteran, non-spouse (joint VA loan)
Acceptable cosigners for VA loans include:
- A legally married spouse
- An unmarried military member
What Are the Financial Requirements for VA Loan Cosigners?
If you have someone who is cosigning on your VA loan or is a co-borrower, they will need to meet certain financial requirements to prove their creditworthiness. Some of these requirements may include:
- Debt-to-income: The VA prefers applicants to have a debt-to-income ratio of no more than 41%.
- Credit score: The VA does not set requirements for credit scores. However, most lenders do. Most lenders will want the co-applicant to have a credit score of at least 620.
- Proof of income: Your lender will most likely want to see that your co-applicant has a steady form of income. They may, therefore, ask for certain documents like W2s, tax returns, or pay stubs.
- Down payment: Most VA loans do not require a down payment, unless it’s a joint VA loan. Joint VA loans can get complicated, so if you have questions about this, please do not hesitate to reach out and ask!
- Other requirements: Your cosigner may be required to meet other guidelines as stipulated by your lender.
Talk to an Expert
If you plan on having a cosigner or co-borrower on your VA loan, we recommend that you talk to an expert. VA loan requirements can be complicated. We want to make sure that you’re getting the most complete, up-to-date, and accurate information possible. Call today to get in touch!