Qualifying For A VA Joint Loan
When one or more veterans apply for a VA home loan together, there may be a few VA rules and regulations that apply to these types of loan applications that don’t necessarily apply to others.
VA Pamphlet 26-7, the VA Lender’s Handbook, says when it’s time to submit the loan application and have it approved, some kinds of VA joint loans require VA review before the loans can be approved. “Any joint loan for which the veteran will hold title to the property and any person other than the veteran’s spouse must be submitted for prior approval.”
Furthermore, “Any loan for which the veteran and the veteran’s spouse will hold title to the property, whether or not the spouse also uses entitlement, may be closed automatically by a lender with automatic authority.”
When it comes to qualifying for the loan financially, the VA joint loan have certain rules that must be applied depending on whether the other applicants are veterans or not. When both borrowers are veterans, VA Pamphlet 26-7, Chapter Seven instructs the lender:
“Consider the credit and combined income and assets of both parties. Strengths of one veteran related to income and/or assets may compensate for income/asset weaknesses of the other. However, satisfactory credit of one veteran cannot compensate for the other’s poor credit.”
When the borrowers are not both (or all) veterans, Chapter Seven says:
“Veteran’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. 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.”
In other words:
- Income strength of the veteran may compensate for income weakness of the non veteran, but
- Income strength of the non veteran cannot compensate for income weakness of the veteran in analyzing the veteran’s ability to repay his or her allocable portion of the loan.
For more information about what’s possible for a VA joint loan, either between a veteran and non veteran or among multiple veteran borrowers, contact the VA directly or ask us in the comments section.