VA Loan Rules: Who Can Use the VA Loan Benefit?

A reader asks, “I was honorably discharged from the Navy after serving for 4 years. I was wondering if my mom can use my VA home loan to buy build a new house on her land?”

The short answer is no. According to VA loan rules,  benefits are intended only for the eligible veteran and a spouse, where applicable. The veteran and spouse must be legally married in order to use the benefit together, otherwise the borrower must apply for loan on his/her own (in order to get the full VA guaranty on the loan).

Siblings, parents, dependent children and other relatives are not permitted to use the VA loan benefit. This benefit, unlike the Post-9/11 GI Bill, is not transferable. It’s understandable that in light of how the GI Bill benefit has changed over the years that people might assume that the same rules could apply to the VA home loan benefit. But this is not the case.

Borrowers are permitted under VA loan rules of the program to apply for a “joint loan” with a non-veteran borrower. This would require a participating VA lender willing to approve this transaction and the VA loan guaranty would only cover the veteran’s portion of the loan.

Borrowers may have difficulty finding a lender willing to issue this type of loan depending on housing market conditions and other factors, but should you find a lender who can work with you, both parties would be required to financially qualify for the mortgage loan.

The veteran borrower cannot assume a disproportionate share of the financial responsibility for the mortgage and a down payment may be required of the other party not covered by the VA loan guaranty.

Do you have questions about VA home loans? Ask us in the comments section. All comments are held for moderation.