VA home loans are government-backed mortgages offered to active-duty service members, veterans, and eligible surviving spouses that come with a host of benefits such as no down payment, lower interest rates, and no private mortgage insurance requirements. However, not everyone can qualify for a VA home loan on their own, which is why some people might look to get a VA home loan with a cosigner.
What is a Cosigner?
A cosigner is a person who agrees to assume equal responsibility for a loan or credit card application with the primary borrower. In the case of a VA home loan, a cosigner is someone who helps the primary borrower meet the credit and income requirements set forth by the Department of Veterans Affairs.
Why Get a VA Home Loan with a Cosigner?
There are several reasons why someone might want to get a VA home loan with a cosigner. For instance:
- The primary borrower has a low credit score or limited credit history.
- The primary borrower has a high debt-to-income ratio.
- The primary borrower wants to increase their chances of getting approved for a VA home loan.
Who Can Be a Cosigner for a VA Home Loan?
A cosigner for a VA home loan can be anyone who meets the following requirements:
- Is a spouse, family member, or friend of the primary borrower.
- Has a good credit score and a stable income.
- Is willing to assume equal responsibility for the loan.
How Does a Cosigner Affect the VA Home Loan Application Process?
If you’re considering getting a VA home loan with a cosigner, it’s important to understand how this will affect the application process. Here are a few things to keep in mind:
- The cosigner will need to provide their financial information, including income, debt, and credit score.
- The cosigner will need to sign the loan application and related documents.
- The cosigner will be equally responsible for repaying the loan if the primary borrower defaults.
- The cosigner’s income and credit score will be taken into account when determining the loan amount and interest rate.
What Are the Benefits of Getting a VA Home Loan with a Cosigner?
There are several benefits to getting a VA home loan with a cosigner:
- Increased chances of getting approved for a VA home loan.
- Access to a larger loan amount and lower interest rates.
- The ability to build credit and establish a good payment history.
What Are the Risks of Getting a VA Home Loan with a Cosigner?
While there are many benefits to getting a VA home loan with a cosigner, there are also some risks to keep in mind:
- The cosigner is equally responsible for repaying the loan if the primary borrower defaults.
- If the primary borrower misses payments or defaults on the loan, it can hurt both the primary borrower’s and the cosigner’s credit scores.
- If the cosigner needs to apply for credit themselves, the VA home loan may affect their debt-to-income ratio.
How to Apply for a VA Home Loan with a Cosigner?
If you’re interested in getting a VA home loan with a cosigner, here’s how to apply:
- Find a lender that offers VA home loans and ask if they allow cosigners.
- Get pre-approved for a VA home loan with the cosigner’s financial information included.
- Find a home within your budget and make an offer.
Conclusion
Getting a VA home loan with a cosigner can be a great way to increase your chances of getting approved for a loan, access lower interest rates, and establish good credit. However, it’s important to understand the risks involved and make sure that both you and your cosigner are comfortable with the arrangement. If you have any questions about getting a VA home loan with a cosigner, reach out to a VA-approved lender for more information.