Can I Have a Co-Signer on a VA Loan?

If you’re a military member with a blemish on your credit, such as bankruptcy, or you’re credit-challenged, you might be considering whether to have someone co-sign on your loan. Or perhaps your finances are in good shape, but you’d like to improve your chances of qualifying for a mortgage with a great rate and terms. You might be asking yourself, “Can I have a co-signer on a VA loan?” The answer is yes. Let’s take a look at what it involves.

What Is a Co-Signer?

People often confuse co-signers with co-borrowers. In most cases, co-borrowers have equal rights and shares to the property after purchase. In contrast, co-signers generally only become responsible for the mortgage if you default on the loan and do not live with you in the home. Eligible co-signers for most home loans include a parent, spouse, another family member, or even close friends.

Co-signing on someone else’s mortgage is a huge financial risk for the person involved. Not only would they become responsible for mortgage payments if you default, but their credit history would be negatively impacted. Consequently, it’s essential to choose wisely and put extra consideration into your finances and the home you purchase.

Can You Have a Co-Signer on Your VA Loan?

VA home loans do allow you to include a co-signer on your home loan. Doing so can drastically increase your likelihood of qualifying for a mortgage. It’s especially likely if the person has a low debt-to-income ratio, a high credit score, and a spotless credit history.

However, there are a few caveats. For VA home loans, your co-signer generally needs to be another eligible VA loan borrower (a former or current military member) or your spouse. In addition, the VA home loan program requires that your co-signer also live inside the home with you. However, some lenders make exceptions, so check with a mortgage broker or lender if you fall outside that scope.

Some options for this include:

• Two married veterans using only one spouse’s entitlement
• Two married veterans where portions of each entitlement are used
• Two non-married veterans where both portions of entitlement are used

Entitlement is the amount the VA will repay if you default on your loan. There are different combinations of entitlement that can be used in circumstances that you both have it. Talk to your lender to see what options there are.

When Should You Consider a Co-Signer?

With so many restrictions on who can be your co-signer and why you might feel hesitant to move forward with appointing one. However, there are a few good reasons to consider a co-signer for your loan:

You and your spouse have agreed to keep assets separate, but you need assistance qualifying for the home.
Your preferred co-borrower does not want to be on the title because of potential issues with creditors or inheritances in blended families.

Your preferred co-borrower wants to keep their debt-to-income ratio low to qualify for another property or another big purchase.

We’re Here To Help With Your VA Loan

At Hero Home Loans, we’ve handled a variety of situations where our customers have considered the question of whether they can have a co-signer on a VA loan. We can help you explore your options. Request your rates to get started.