Can You Have a Co-signer on a VA Loan?

A co-signer on a VA loan is someone who agrees to share responsibility for the loan if the primary borrower is unable to make payments. The Department of Veterans Affairs (VA) does allow co-signers on VA loans, but the borrower and co-signer must meet certain eligibility requirements. Understanding who can co-sign on VA loans, why you might consider a co-signer, and the potential benefits and drawbacks can help you make an informed decision.

Who can be a co-signer on VA loans?

For VA loans, co-signers are generally limited to the veteran’s spouse or another VA-eligible individual. However, in certain cases, non-spouse, non-veteran co-signers may be allowed, but this often requires additional considerations, like a down payment. VA loan co-signers must also live in the home with you.

It's important to check with your lender to understand the specific rules and requirements for co-signers on VA loans. Aim for a co-signer with steady income and good credit to help strengthen your loan application. Remember, your co-signer will be legally responsible for repaying the loan if you, as the primary borrower, fail to do so.

VA loan co-signer requirements

• Prove service eligibility: VA loans are available to military veterans, active-duty military personnel, Reserve members, National Guard members and eligible surviving spouses. A Certificate of Eligibility (COE) is often required to check you and your co-signer’s military status for a VA loan approval. 
• Debt-to-income ratio: The VA prefers joint applicants to have a combined debt-to-income (DTI) ratio of no more than 41%. You can calculate your own DTI ahead of time to help you prepare. 
• Credit score: Most lenders require a credit score of 620. Most lenders base their decision on the lowest credit score between you and the co-signer.  
• Proof of income: Lenders typically require you and your co-signer to provide proof of employment and stable income through W2s, tax returns, or pay stubs. Your active duty service can often be used as proof of income. 
• Full or remaining entitlement: Your VA entitlement determines how much you can borrow without needing to make a down payment. Check your remaining entitlement on your COE. If you’ve used your entitlement on another VA loan, you may be required to provide a down payment, even though most VA loans do not require a down payment. Co-borrowing on a VA loan may have different policies regarding entitlement. 

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VA loan co-signer vs. co-borrower

Co-borrower

A co-borrower on a VA loan lives in the home and shares ownership. They are equally responsible for the mortgage payments and homeownership. Acceptable co-borrowers for VA loans include:

• A non-veteran spouse.
• A veteran spouse (with or without using their VA entitlement).
• A veteran who is not a spouse (both must use their entitlement).
• A non-veteran, non-spouse (requires a joint VA loan).

Co-signer

A co-signer on a VA loan must live in the home. This person also assumes financial responsibility if the borrower defaults but does not share ownership. Acceptable co-signers for VA loans:

• A legally married spouse.
• An unmarried military member who also qualifies for a VA loan.

Pros of adding a co-signer

Adding a co-signer to your VA loan can offer several advantages, especially if your credit score, income, or debt-to-income ratio isn’t ideal. A co-signer’s financial strength can help you secure a better loan structure and improve your chances of approval.

• Lower interest rates due to improved creditworthiness.
• Higher loan amounts because of increased financial stability.
• More favorable repayment terms due to reduced lending risks.
• Increased chances of approval for applicants with weaker credit or income.

Cons of adding a co-signer

It’s essential to recognize the potential downsides of adding a co-signer on a VA loan. Both you and your co-signer take on financial risks that could impact credit scores and personal relationships.

• The co-signer is responsible for the loan if you default.
• Their credit will be impacted if payments are late or missed.
• They don’t receive ownership benefits despite financial responsibility.
• Only the primary borrower may receive tax benefits.
• If financial obligations create tension, the relationship could become strained. 

Who gets listed on the title for a VA loan?

The primary borrower and any co-borrowers can be listed on the title. Co-signers, however, are not on the title.

Can you have two people on a VA loan?

Yes, you can have two people on a VA loan as either a co-borrower or  co-signer. A co-borrower shares the responsibility of the mortgage payments and is added to the title. A co-signer helps you get approved for the loan and is responsible for the debt but does not share any legal responsibility for the home. A co-signer and a co-borrower must meet VA eligibility requirements. 

Bottom line

You can have a co-signer on a VA loan, as long as they meet the requirements. Your financial situation and homeownership goals will determine if having a co-signer on a VA loan is the right option. While a co-signer can improve your loan terms and approval odds, they also take on financial risk. Weigh the pros and cons carefully to help you make the best decision for your home purchase.

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