Can You Have a Cosigner on a VA Loan?

For many veterans and active-duty service members, the prospect of becoming a homeowner is an essential goal after serving their country. The Department of Veterans Affairs (VA) offers numerous benefits to make this dream a reality, including the VA home loan program. However, some veterans might need additional support to qualify for a VA loan due to their financial circumstances. In such cases, having a cosigner can be a viable solution. In this blog post, we’ll explore the concept of having a cosigner on a VA loan and the considerations involved.

Understanding the VA Loan Program

Before we delve into the possibility of having a cosigner, let’s briefly review the VA loan program’s primary features. VA loans are mortgage loans offered to eligible veterans, active-duty service members, and surviving spouses. These loans are provided by private lenders, such as banks and mortgage companies, but are backed by the VA, making them more accessible and affordable.

Key Benefits of a VA Loan

1. No Down Payment: One of the most attractive features of a VA loan is that eligible borrowers can purchase a home with no down payment, potentially saving them thousands of dollars upfront.

2. No Mortgage Insurance: Unlike conventional loans, VA loans typically do not require private mortgage insurance (PMI), resulting in lower monthly payments.

3. Competitive Interest Rates: VA loans often come with competitive interest rates, helping borrowers save money over the life of the loan.

4. Easier Qualification: VA loans are designed to be more forgiving in terms of credit requirements, making homeownership attainable for veterans who might face challenges obtaining a conventional loan.

Can You Have a Cosigner on a VA Loan?

The VA loan program is designed to provide unique benefits to eligible veterans, so the idea of bringing in a cosigner may seem contradictory. In essence, the VA loan program does not have a provision explicitly allowing or disallowing cosigners. Therefore, whether you can have a cosigner on a VA loan depends on the lender’s policies and their interpretation of VA guidelines.

Lender Policies on Cosigners

Some lenders may be willing to accept a cosigner on a VA loan application, especially if the primary borrower’s income or credit score is insufficient to meet the lender’s requirements. However, it’s essential to note that not all lenders permit cosigners on VA loans, and the ones that do might have specific criteria or limitations in place.

A benefit to working with Six Pillar Lending to secure your VA home loan is that we work with dozens of lenders, so while some may not take a cosigner, others will. We already know who to work with, so the chore of finding a lender who accepts a cosigner on a VA loan is already done for you.

Qualifying for a VA Loan with a Cosigner

If a lender does allow cosigners on VA loans, certain conditions usually apply:

1. The Primary Borrower Must Be Eligible: The primary borrower, typically the veteran or service member, must meet the VA’s eligibility requirements to obtain a VA loan.
2. The Cosigner Must Be Creditworthy: The cosigner’s creditworthiness is a crucial factor considered by the lender. A cosigner with a strong credit history and financial stability can enhance the loan application’s chances of approval.
3. Meeting Income Requirements: If the primary borrower’s income is insufficient, the cosigner’s income might be used to meet the lender’s debt-to-income (DTI) ratio criteria.
4. Joint Responsibility: Both the primary borrower and the cosigner will be equally responsible for repaying the loan. This means that any missed payments or defaults will affect both parties’ credit scores.

Conclusion

While the VA loan program does not explicitly endorse or prohibit cosigners, some lenders may allow cosigners on VA loan applications. A cosigner can be beneficial for eligible borrowers who need additional financial support to qualify for a VA loan. However, borrowers should consider the implications and responsibilities of having a cosigner before proceeding.

Contact the VA home loan experts at Six Pillar Lending to help guide you through the process.