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Welcome to our comprehensive guide about joint VA loans. If you’re a veteran or a service member, and you’re hoping to purchase a home with your spouse, partner, or another eligible co-borrower, a joint VA loan might be the right choice for you. In this article, we’ll cover all the essential details you need to know about this type of loan, including its benefits, requirements, and how to apply. Let’s get started!
What is a Joint VA Loan?
A joint VA loan is a mortgage loan program that allows two or more eligible borrowers to buy or refinance a property together. Both borrowers must be eligible for a VA loan, which means they are veterans or active-duty service members, or surviving spouses of those who have died in service or as a result of a service-related disability.
One of the significant advantages of a joint VA loan is that it allows borrowers to pool their VA entitlements, which means they may be eligible for a higher loan amount and better terms than if they applied for an individual loan.
Who is Eligible for a Joint VA Loan?
To qualify for a joint VA loan, each borrower must meet the individual eligibility requirements set by the Department of Veterans Affairs. Here are some general guidelines:
Eligibility Criteria |
Requirements |
|---|---|
Service Requirements |
Borrowers must be veterans or active-duty service members who have served for at least 90 consecutive days during wartime or 181 days during peacetime. National Guard and Reserve members who have served for at least six years or are on active duty may also be eligible. |
Credit Score |
There is no minimum credit score requirement, but most lenders prefer borrowers with a credit score of at least 620. |
Income and Employment |
Borrowers must have a stable and sufficient income to qualify for the loan. They also need to provide proof of employment or steady income. |
Certificate of Eligibility |
Borrowers must have a valid Certificate of Eligibility (COE) from the Department of Veterans Affairs that confirms their eligibility for a VA loan. |
How to Apply for a Joint VA Loan?
The application process for a joint VA loan is similar to that of an individual VA loan. Here are the steps to follow:
- Find a lender: You’ll need to find a lender who specializes in VA loans and is approved by the Department of Veterans Affairs.
- Obtain your COE: You and your co-borrower will need to obtain a valid Certificate of Eligibility from the Department of Veterans Affairs.
- Complete the loan application: You and your co-borrower will need to complete a loan application and provide all the necessary documentation, such as income and employment verification, bank statements, tax returns, and more.
- Wait for Approval: The lender will review your application and make a decision on whether to approve or deny the loan. If approved, you’ll receive a Loan Estimate that outlines the loan terms and closing costs.
- Closing: If you accept the loan, you’ll need to attend a closing meeting to sign the necessary documents and finalize the loan.
Benefits of Joint VA Loans
Joint VA loans offer several benefits for eligible borrowers, including:
- Higher loan limits: By pooling their entitlements, co-borrowers may qualify for a higher loan amount, which can be beneficial in high-cost areas.
- Lower interest rates: VA loans typically have lower interest rates than traditional loans, which can save borrowers money over the life of the loan.
- No down payment: Joint VA loans allow borrowers to purchase a home with no down payment, which can make homeownership more accessible and affordable.
- No private mortgage insurance: VA loans do not require private mortgage insurance (PMI), which is a significant savings for borrowers who usually have to pay PMI until they have enough equity in the home.
- Flexible credit requirements: While lenders still look at credit scores, VA loans have more flexible credit requirements than conventional loans.
FAQs
1. Can I use a joint VA loan to purchase a second home?
No. Joint VA loans can only be used to purchase or refinance a primary residence.
2. Can I use a joint VA loan to buy a multi-family property?
Yes. Joint VA loans can be used to purchase a multi-family property, as long as one of the units is occupied as the primary residence.
3. Can I add a non-veteran co-borrower to a joint VA loan?
Yes. You can have a non-veteran co-borrower on a joint VA loan, but only the percentage of the loan that corresponds to the eligible borrower’s entitlement will be backed by the VA.
4. Can I use a joint VA loan to buy a manufactured home?
Yes. Joint VA loans can be used to buy a manufactured home and its lot, but the home must meet specific safety and construction standards set by the VA.
5. What happens if one borrower defaults on a joint VA loan?
If one borrower defaults on a joint VA loan, the other borrower(s) is still responsible for repaying the loan. The VA may also reduce the entitlement of the borrower who defaulted, which could affect their ability to obtain future VA loans.
6. Can I use my VA loan entitlement more than once?
Yes. You can use your VA loan entitlement as many times as you want, as long as you meet the eligibility requirements.
7. Is there a limit on how much I can borrow with a joint VA loan?
Yes. The VA sets a maximum loan limit, which varies depending on the location of the property and the number of units in the building. In 2021, the maximum loan limit for most areas is $548,250.
8. Can I use a joint VA loan to refinance an existing mortgage?
Yes. Joint VA loans can be used to refinance an existing mortgage, as long as the new loan meets the VA’s requirements.
9. Can I use a joint VA loan to make home improvements?
Yes. Joint VA loans can be used to make home improvements, as long as they are necessary and add value to the property.
10. Do I have to pay closing costs on a joint VA loan?
Yes. Borrowers are responsible for paying closing costs on a joint VA loan, which can range from 2% to 5% of the loan amount. However, some lenders may offer a “no-closing-cost” option, which means they roll the closing costs into the loan amount and increase the interest rate slightly.
11. What is the funding fee for a joint VA loan?
The funding fee for a joint VA loan varies depending on the size of the loan, the type of loan, and the borrower’s military status. For first-time use of a joint VA loan, the funding fee is 2.3% of the loan amount, but it can be lower for subsequent uses and for disabled veterans.
12. Can I buy a co-op with a joint VA loan?
No. Joint VA loans cannot be used to purchase co-ops or other types of shared housing.
13. Can I use a joint VA loan to buy a farm or ranch?
No. Joint VA loans cannot be used to purchase farms or ranches, unless the property is used primarily for residential purposes.
Conclusion
At this point, you should have a solid understanding of what a joint VA loan is and how it works. If you’re eligible, a joint VA loan can be an excellent way to achieve homeownership with a loved one while taking advantage of the numerous benefits offered by the program. Remember to shop around for lenders and compare rates and terms carefully before making a decision. Good luck!
Closing Disclaimer
This article is for informational purposes only and should not be construed as legal or financial advice. You should always consult with a qualified professional before making any decisions regarding your finances or investments. The Department of Veterans Affairs does not endorse any particular lender or financial institution.