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Mortgage Myth: A VA Loan Co-Borrower Doesn’t Have to be a Spouse

VA loans have some of the most generous terms available in the entire mortgage industry. For qualifying veterans, these loans represent an excellent opportunity to secure an affordable mortgage with a small downpayment; in some cases veterans can even purchase a home with no downpayment whatsoever. To use these loans, however, you may need a VA loan co-borrower. 

But there are many limits to these loans, especially for who can use them. They are not, of course, available to the general public. Only veterans who have served our country, as well as some of their family members, have the right to use these loans. They are part of a veteran’s benefits package, much like tuition assistance, healthcare, and other important financial incentives that come from serving in the military.

It’s well known that only a few people can use these loan, but this knowledge has actually led to a myth; a myth that assumes co-borrowers on the loan must be your spouse. As we will show, this is not the case.

The VA Loan Myth: Co-Borrowers Must be Your Spouse

VA loans have a reputation for being limited, at least in who is eligible. Only veterans and current service members are eligible, and even then you need to meet a variety of conditions, including how, when, and how long you served in the military.

Because of this reality, it’s assumed that only legal spouses are eligible as co-borrowers on a loan. In most cases, co-borrowers are, in fact, spouses; this is a reality for VA loans as well as other types of financing.

But co-borrowers don’t have to be spouses.

The VA Loan Truth: Other Veterans Can be a Co-Borrower

For the average homebuyer, is they are going to use a co-borrower, it’s going to be their spouse. But it’s not a requirement.

For this form of financing, a co-borrower can be anyone who is eligible for a VA loans. This includes spouses, but it’s not limited to husbands and wives. Your fellow veterans can also be a co-borrower on the loan.

Now that we know the truth, we can begin to talk about the details of using a fellow veteran as a co-borrower on your loan.

Your VA loan co-borrower will have to live on the property.

Co-Borrower MUST Live on the Property

This is one of the most important points, one that will influence your decision to use a co-borrower, as well as someone’s decision to be a co-borrower. If you are going to use a co-borrower on your application, that person must live on the property.

If we were discussing co-signers, the point would be different. Unfortunately, co-signers are not allowed with VA loans. In this case, we are discussing co-borrowers, who have to occupy the property as if it were their own. (Because it is!)

Eligibility for Co-Borrowers on a VA Loan

Generally speaking, two types of individuals are eligible as co-borrowers on a VA loan. The first, and most common, is spouses of veterans. These are actually the only non-service individuals that are able to be listed as a co-borrower regardless of whether or not they served.

The other category is another eligible veteran. As long as this person meets that same eligibility requirements for their own VA loan, they would, most likely, qualify as a co-borrower on your loan. This can bring a variety of advantages and help you secure high-quality, low-downpayment financing on your next purchase.

Benefits of Using a VA Loan Co-Borrower

While VA loans provide generous terms, often bringing downpayment and credit requirements that allow most users to quality, there are still benefits that come from using a co-borrower on your loan.

One of the main benefits is that it helps you overcome credit challenges. If you have had financial issues in the past that have led to poor credit, getting the help of a veteran co-borrower could improve your chances of approval. VA-loan credit requirements vary by the lender, but two borrowers may be able to secure a loan despite one of them having a low credit score.

It can also help overcome debt-to-income problems. Potential borrowers with high amounts of debt, such as credit card balances and vehicle loans, may have difficulty getting approved for a loan. However, a co-borrower with a minimal debt load may help overcome this issue.

There is also the simple fact of affordability. Mortgage payments can significantly restrict your monthly income, limiting how much additional cash you have for groceries, fuel, entertainment, and utilities. But with a co-borrower, you may be able to split to cost of homeownership in half, freeing more cash with every paycheck.

Another advantage is the chance to secure a larger loan for a bigger or more luxurious home. If your income, credit, or debt load limits how much you can borrow, using a co-borrower, especially one with a strong credit profile, could lead to a larger home loan. In turn, this could mean more space or a home in a more attractive area.

The VA Loan Entitlement

This is a minor detail, and one that can be sorted out as you go through the application, but your loan will be influenced by the concept of VA loan entitlement. Essentially, every eligible VA borrower is entitled to a certain amount that will be supported by the VA. For these loans, you can use all or some of each borrower’s entitlements.

Entitlement is a key part for determining how much you can borrow before a downpayment is required. Using both borrower’s entitlement can reduce that chances that you will need a larger downpayment, and much of it has to do with entitlement.

Dedicated to Serving the Ones Who Have Served!

If you are considering a VA loan, contact the team at San Diego Purchase Loans today. We are proud to serve San Diego and the surrounding area, assisting with numerous VA loans for the region’s many Navy, Marine, Coast Guard, and Army veterans.

You’ve done your part for out country, now let us do our part by helping you secure a top-quality VA loan!


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Chad Baker, CrossCountry Mortgage   
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