VA requirements

Can a Veteran get a VA Loan with a Non-Veteran?

January 9, 2015

author:

Can a Veteran get a VA Loan with a Non-Veteran?

va loansThere are plenty of situations where a veteran and a non-veteran might want to purchase a home together. For the purpose of this blog post, a non-veteran is someone who is not legally married to the veteran or considered a spouse under the law. Can vets and non-vets take out a VA loan together?

The Department of Veterans Affairs makes provisions for vets who want use their VA loan benefit to purchase a home with a civilian borrower. There are some restrictions — most of which apply to the veteran. For example, any veteran applying for a VA loan must certify they intend to use the property as the primary residence. The VA rules say any non-veteran (or a veteran who does not choose to use his or her VA loan entitlement on the loan) is exempt from the primary residence rule.

When it comes to qualifying for the loan, the VA rules on credit are stricter. According to the VA lender’s rulebook, the veterans’ 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.”

So far so good — the VA doesn’t expect the veteran borrower to be responsible for the other borrower’s interest in the property.

But, “…a different analysis applies to the portion of the loan allocable to the nonveteran. The credit of the nonveteran must be satisfactory.  However, the combined income of both borrowers can be considered in evaluating repayment ability.”

The VA rules are designed to allow a veteran with “income strength” to compensate for any “income weakness” on the non-veteran’s part of the bargain. But the VA does not allow the non-veteran to offset financial “weakness” of the vet. The military borrower must be able to handle the financial burden of his or her portion of the VA loan.

The most important thing to remember about joint loans between a veteran borrower and a non-veteran co-borrower is that the military member’s VA loan benefit is limited to the veteran’s portion of the interest in the property. If a vet and non-vet split the loan 50/50, the VA loan guaranty covers the veteran’s 50%, not the full amount of the sale price.

7 Comments
  1. [...] Loans: Important Co-Borrower Issues March 02, 2011   Joe Wallace   No comments In our last blog post, we discussed the VA requirements for veterans and non-veterans who want to apply for a home loan [...]

  2. Kevin Walton

    Great content here. I'm just starting out in educating myself on VA lending. This post raises a question or two. Using your example above, on a purchase price of $300k does one lender fund the entire amount of the purchase price? Or does the lender fund only the vet's half of $150k? If it's $150k is the only way for the non vet to purchase their half cash? Or? Thanks for your feedback and your efforts on providing value based info.

    • Joe Wallace

      Hi Kevin, thanks for asking--the most important thing to remember about joint loans between a veteran borrower and a non-veteran co-borrower is that the military member's VA loan benefit is limited to the veteran's portion of the interest in the property. If a vet and non-vet split the loan 50/50, the VA loan guaranty covers the veteran's 50%--not the full amount of the sale price." The lender would decide terms for the non-vet's portion of the loan, but the VA would not insure that portion.

  3. Dawn Hadler

    Your article was posted in 2011. Have things changed since? I'm finding it very difficult to find a bank that will do it here in South Carolina.

    • Joe Wallace

      The key is lender participation--VA loan rules still allow vets and civilians to borrow together. Have you tried applying via VALoans.com? (A private company, not a government agency.)

  4. norma anderson

    MY BOYFRIEND AND I ARE CONSIDERING A PURCHASE OF A HOME. HE IS A 25 YEAR VET, JUST RETIRING AT AS LTC IN THE ARMY. WE ARE NOT MARRIED AS OF YET, CAN WE TOGETHER OBTAIN A LOAN FOR A HOME IN FLORIDA AS OWNER OCCUPIED DWELLING? WILL THE ENTIRE LOAN BE FINANCED WITH THE VA

    • Joe Wallace

      That may depend on the laws of your state, but VA loan rules specify that an engaged couple may get a VA loan that is treated the same as if the couple were married--however the loan is conditional upon the marriage and the marriage must take place before the loan closes.

Leave a comment

Your email address will not be published. Required fields are marked *