This guide covers VA guidelines on co-borrowers for VA loans. We will discuss the VA guidelines on co-borrowers. Income is one of the most important factors when qualifying for VA loans. VA loans have specific mortgage lending guidelines for co-borrowers and are different than any other mortgage loan programs regarding co-borrowers. Dale Elenteny, a senior loan officer at Gustan Cho Associates and a VA loan expert, says the following about VA guidelines on co-borrowers:
VA loans are the best mortgage loan program available for home buyers. Homebuyers do not have to put any money down on a home purchase. There is no annual mortgage insurance, no maximum loan limit, no minimum credit score requirements, and no maximum debt-to-income ratio on VA loans.
Buyers can purchase a home with no money out of pocket with a VA loan. This holds true as long as you can get a seller concession from the home seller to cover the closing costs. Or, if buyers cannot get a seller concession, borrowers can get a lender’s credit from the lender to cover part or all of the closing costs. VA guidelines on co-borrowers do not allow non-occupant co-borrowers on VA loans like they do on FHA and conventional loans. Per VA guidelines on co-borrowers only the spouse of the veteran is allowed to become a co-borrower on a VA loan. This blog will discuss VA guidelines on co-borrowers for VA home loans.
Mortgage Rates On VA Home Loans
Mortgage rates on VA loans are the lowest of any other loan program. Mortgage interest rates on VA loans are lower than mortgage rates on FHA, USDA, and Conventional loans. VA loans have no mortgage insurance premium even though the home buyer does not put any money down, and the mortgage loan is 100% financing. The Department of Veteran Affairs is the governmental entity that sets standards and VA lending guidelines on VA loans and insures VA loans. The Department of Veteran Affairs does not originate nor fund VA loans.
Guarantee By The Department of Veterans Affairs
The Department of Veteran Affairs insures VA loans to lenders as long as the loans they originate and fund adhere to VA mortgage guidelines. Unfortunately, not all home buyers can qualify for VA loans. Only Veterans of the United States Armed Forces with a VA Certificate of Eligibility can qualify for a VA loan. Veterans with a VA Certificate of Eligibility can enjoy the great benefit of buying a home with a VA Loan with no money down and no closing costs with extremely low mortgage rates. VA loans have very lenient lending guidelines. However, VA guidelines on co-borrowers are pretty strict.
VA Guidelines on Co-Borrowers Versus Other Mortgage Programs
Every mortgage loan program has its mortgage lending guidelines about co-borrowers. VA guidelines on co-borrowers is different than other mortgage loan programs. With FHA loans, borrowers can have co-borrowers related to the main borrower. The relationship between co-borrowers and the borrower needs the co-borrower needs to be related to the borrower by marriage, law, or blood.
For someone to be eligible to become a co-borrower on an FHA loan, co-borrowers need to be a spouse, son, daughter, brother, sister, mother, father, grandmother, grandfather, step-son, step-daughter, step-brother, step-sister, step-mother, step-father, step-grandmother, step.-grandfather.
The enforcement of the actual relationship depends on each particular lender. Many lenders like myself will not check. We will take the borrower’s word on the relationship of the co-borrower to the main borrower on an FHA loan. Fannie Mae does not allow co-borrowers on Conventional Loans. However, Freddie Mac does permit co-borrowers on Conventional loans, and the co-borrower does not have to be related by blood, marriage, or law like FHA loans.
Updated VA Guidelines on Co-Borrowers
The Department of Veteran Affairs does allow a co-borrower to be added to a VA loan. However, the co-borrower needs to be the spouse of the Veteran. Unfortunately, you cannot qualify to be a co-borrower on a VA loan if you are a fiance of the Veteran or a live-in boyfriend or live-in girlfriend of the Veteran. There are many cases where a Veteran has a live-in girlfriend or boyfriend who has been living together for many years. They may have children together. However, if they are not legally married, they do not qualify to be a co-borrower on a VA loan. I recently had a call from a Veteran with a VA Certificate of Eligibility living with an ex-spouse. They divorced many years ago but reconciled and were living together. They also had kids together and were interested in purchasing a home. Unfortunately, the Veteran needed the ex-spouse to be added as a co-borrower to qualify for the VA loan. Although they are a couple, have reconciled after their divorce, and are living together, the ex-spouse cannot be added on as a co-borrower unless they marry again.
The Veterans Administration does not allow co-borrowers who is not married to the eligible borrower. You can not have non-occupant co-borrowers on VA loans like you can on FHA and VA loans.
We can proceed and process and underwrite the VA loan. However, the marriage will be a condition in closing their VA loan. They decided to get re-married to qualify for the VA loan. Case scenarios like these often happen where couples get divorced and reconcile and get remarried again. In this case scenario, their remarrying made the VA loan happen, and these folks will close on their VA loan. If you are a Veteran and would like to qualify for a VA loan, please contact us at Gustan Cho Associates at 800-900-8569 or text us for faster response. Or email us at firstname.lastname@example.org. We are available seven days a week, evenings, weekends, and holidays to take your phone call or answer your emails on any questions you may have in qualifying for a VA loan.