All About Applying For VA Joint Loans
A VA joint loan is defined as;
–a loan where a veteran and a non veteran apply together for the loan
–two veterans apply together for a VA loan but only one uses VA entitlement
–a veteran and a spouse who is also a veteran, both entitlements used for the VA loan
–a veteran and one or more other veterans (not a spouse), who all use VA entitlement for the mortgage
According to the VA, “a loan involving a veteran and his or her spouse will not be treated as a “joint loan” if the spouse is not a veteran or is a veteran who will not be using his or her entitlement on the loan.”
The rules for VA joint loans are similar to other VA mortgages; the borrowers must certify the property is to be their primary residence, but the VA rules make an exception for any borrower who does not use VA entitlement for the loan. Joint loan rules are different than “single applicant” VA loans in other ways, too.
Two or more eligible veterans applying for a joint loan can buy a building with four family units and one business unit, plus one additional unit for each veteran on the loan.
VA regulations state that joint loans require prior approval by the VA when a veteran “will hold title to the property and any person other than the veteran’s spouse…” VA joint loans where the veteran and a spouse own the property do not require prior approval–any lender with automatic VA loan authority can approve the loan.
Joint loans require the lender to examine the credit and income of all applicants. Joint loans are attractive to some VA borrowers because a vet with good income can make up for the income weaknesses of another applicant. For example, a military member with more rank and higher pay can be an advantage when the co-applicant is a veteran with lower rank and pay.
VA credit requirements are not as flexible, though. The credit weaknesses of one applicant can’t be overshadowed by the credit strengths of the other borrower(s).
According to VA rules, the veteran applicant’s “…credit must be satisfactory and veteran’s income must be sufficient to repay that portion of the loan allocable to the veteran’s interest in the property.”