Greetings valued readers! If you’re a veteran or active-duty military looking to buy a home, you may be wondering how you can increase your chances of getting approved for a VA loan. One option is to have a cosigner on your VA home loan. In this article, we’ll discuss everything you need to know about having a cosigner on your VA home loan, including the benefits and requirements.
Introduction
When it comes to buying a home, there are many factors to consider. One of the most important factors is financing, as most people need a loan to purchase a home. For veterans and active-duty military members, the VA home loan program is an excellent option. However, not everyone qualifies for a VA loan, and even if you do, you may not be eligible for the full amount you need. This is where having a cosigner can come in handy.
A cosigner is someone who agrees to be equally responsible for repaying the loan. This means that if you default on the loan, the lender can go after the cosigner for payment. Having a cosigner can increase your chances of getting approved for a loan, as it provides additional collateral and reduces the lender’s risk.
However, not everyone can be a cosigner on a VA home loan. There are specific requirements that both the borrower and cosigner must meet, which we’ll discuss in detail in the following sections.
Cosigner Requirements
Credit Score
One of the most important requirements for a cosigner on a VA home loan is a good credit score. The minimum credit score required by most lenders is 620, but some may require a higher score. Your cosigner must have a credit score that meets the lender’s requirements, and they must be able to show that they have a history of responsible credit use.
Income
In addition to a good credit score, your cosigner must have a stable income. The lender will want to see that your cosigner has enough income to cover their own debts and expenses, as well as the monthly mortgage payments on your home. Your cosigner will need to provide proof of income, such as pay stubs or tax returns.
Debt-to-Income Ratio
The lender will also look at your cosigner’s debt-to-income ratio (DTI), which is the amount of debt they have compared to their income. The lender will want to see that your cosigner has a DTI that is below the maximum allowed by the VA loan program, which is typically 41%. If your cosigner’s DTI is too high, they may not be approved as a cosigner.
VA Loan Eligibility
Finally, your cosigner must meet the eligibility requirements for a VA home loan. This means they must be a veteran, active-duty service member, or surviving spouse of a military member who died in service or as a result of a service-connected disability. If your cosigner does not meet the VA loan eligibility requirements, they will not be able to serve as a cosigner on your loan.
Benefits of Having a Cosigner on Your VA Home Loan
Increased Approval Odds
Having a cosigner on your VA home loan can increase your chances of getting approved for a loan. If you have a low credit score or a high DTI, having a cosigner with a good credit score and stable income can help offset these negative factors and make you a more attractive candidate for a loan.
Higher Loan Amounts
If you need to borrow more than the VA loan limit, having a cosigner can help you get approved for a larger loan. Your cosigner’s income and credit score will be considered when determining the loan amount you are eligible for, which means you may be able to borrow more than you would on your own.
Better Interest Rates
If your cosigner has a good credit score and a low DTI, you may be able to qualify for a lower interest rate on your VA home loan. This can save you thousands of dollars over the life of your loan.
Table of Cosigner Requirements
Requirement |
Description |
|---|---|
Credit Score |
Minimum score of 620 |
Income |
Stable income with proof of income |
Debt-to-Income Ratio |
DTI below 41% |
VA Loan Eligibility |
Veteran, active-duty service member, or surviving spouse of a military member |
Frequently Asked Questions
Can anyone be a cosigner on a VA home loan?
No, only someone who meets the VA loan eligibility requirements and the lender’s cosigner requirements can serve as a cosigner on a VA home loan.
Will having a cosigner on my VA home loan affect my credit score?
Yes, having a cosigner on your loan will affect your credit score. Any missed or late payments will affect both your credit score and your cosigner’s credit score.
Can I remove the cosigner from my VA home loan?
It depends on the lender’s policies. Some lenders may allow you to remove the cosigner if certain conditions are met, while others may require the cosigner to remain on the loan for the life of the loan.
What happens if I default on my VA home loan?
If you default on your VA home loan, the lender can go after both you and your cosigner for payment. This can negatively impact both of your credit scores and lead to financial difficulties.
How much of a home loan can I get with a cosigner?
The loan amount you can get with a cosigner depends on several factors, including your income, credit score, and debt-to-income ratio, as well as your cosigner’s income, credit score, and eligibility for a VA home loan.
Can I have more than one cosigner on my VA home loan?
It depends on the lender’s policies. Some lenders may allow you to have multiple cosigners on your loan, while others may only allow one.
Can a family member be my cosigner on my VA home loan?
Yes, a family member can be your cosigner on your VA home loan as long as they meet the eligibility and cosigner requirements.
What happens if my cosigner dies?
If your cosigner dies, their estate may be responsible for repaying the loan. However, the VA may provide assistance to help you avoid foreclosure.
How long does the cosigner stay on the loan?
The length of time the cosigner stays on the loan depends on the lender’s policies. Some lenders may allow you to remove the cosigner after a certain period or when certain conditions are met, while others may require the cosigner to remain on the loan for the life of the loan.
Can a spouse be a cosigner on my VA home loan?
Yes, a spouse can be your cosigner on your VA home loan as long as they meet the eligibility and cosigner requirements.
What if I can’t find a cosigner?
If you can’t find a cosigner for your VA home loan, there are other options available, such as applying for a different type of loan or working with a credit counseling service to improve your credit score and debt-to-income ratio.
What is the VA funding fee?
The VA funding fee is a one-time fee charged by the VA to help cover the cost of administering the VA home loan program. The fee varies depending on your military status, loan amount, and down payment, but it is typically between 1.4% and 3.6% of the loan amount.
Can I use a cosigner for a VA home loan refinance?
Yes, you can use a cosigner for a VA home loan refinance as long as they meet the eligibility and cosigner requirements.
Conclusion
Having a cosigner on your VA home loan can be a valuable tool for achieving your dream of owning a home. If you’re a veteran or active-duty military member, and you’re struggling to get approved for a VA loan, a cosigner could be the solution you’re looking for. By meeting the cosigner requirements, you’ll have a better chance of getting approved, and you may be able to borrow more than you would on your own. We hope this article has been helpful in explaining everything you need to know about having a cosigner on your VA home loan.
If you’re ready to take the next step and apply for a VA home loan, be sure to talk to a VA-approved lender to get started. They can provide you with more information about the application process and help you determine whether a cosigner is right for you.
Closing/Disclaimer
The information in this article is for educational purposes only and does not constitute legal, financial, or professional advice. We recommend consulting with a qualified professional before making any financial or legal decisions.
While we make every effort to ensure the accuracy of the information presented in this article, we cannot guarantee that it is up to date and free of errors. The VA home loan program is subject to change, and lenders may have different policies and requirements. Please do your own research and consult with a VA-approved lender to get the most accurate and up-to-date information.