We often get asked if someone can “Co-Sign” or be added as a borrower on a Veteran’s Mortgage. In fact, there are “special” qualifying factors any borrower should know about VA Loans and Co-Signors. Based upon the VA Home Loan Guidelines, there are three ways to add a co-borrower to a loan:
- You must be married to the Veteran
- You must ALSO be a Veteran
- You must be the Surviving Spouse of a Veteran
The VA underwriting guidelines actually allow you to purchase a home with a “non Veteran” who is not your spouse, however they limit the amount they will insure. You see VA Home Loans are not actually “Made” by the VA. The Veterans Administration simply insures the Bank making VA Home Loans against default.
Because they insure the Bank against you going into foreclosure (to an extent), the Underwriters must follow the VA Home Loan Guidelines. Because you are getting a loan that is insured by the Government of the United State, the Bank is able to offer you a lower rate.
VA Home Loans are only given to those that have served in the military in some form, or are or were reservists or members of what is called the Public Health Service.
If you are applying for a VA Home Loan and want to purchase the home with a Non Military person that you are Not married to – the VA will only “insure” half of the purchase. So if you are buying a $100,000 house, the VA is only going to insure $50,000 – meaning you will need to make a down payment. In these situations, we can also look at the NCHFA First Time Home Buyer Grant, which offers 3% towards a down payment assistance.
Unlike the FHA Home Loan Non-Owner Occupying Co-Borrower Program, the Non Military Non Spouse Co-borrower must live in the house with you. Their income can be used to qualify you, however we are not going to be able to use this co-borrower to over come a major Credit Issue. Meaning if you don’t meet the waiting period requirements for a VA loan, and have pretty good credit in the last 12 months, simply adding a co-borrower isn’t going to make that loan work.
In a case of a now self-employed Veteran, the Co-Borrower helps substantially. Especially for those Veterans who are self-employed and write off most of their income, to avoid taxes. If income qualification is an issue in getting pre-approved, then the Veteran might want to look at the NC Mortgage Credit Certificate program (MCC) that can help you qualify for a little bigger house, assuming you meet their requirements.
IN GENERAL, however, remember that JUST BECAUSE The Veteran’s Association SAYS you can be a Non-Vet co-borrower – doesn’t mean that you can ACTUALLY make this work! Not all Banks off the program for that purpose. VA Loan General Requirements in North Carolina include a minimum credit score of 620.
Call Steve Thorne, NC Mortgage Expert at 919-649-5058. We love working with Veteran’s, and we appreciate your service! Please note that we offer today’s best rates – but we do not make loans on manufactured housing in NC.