Regular VA loans are an amazing benefit for single-family homes and smaller complexes up to four units, but what if you want more units? Or what if you would like to invest with multiple people? The Joint VA loan is a great tool that you can solve both of these predicaments.
The VA Lender’s Handbook states that “a joint loan is a loan made to • the veteran and one or more nonveterans (not spouse), • the veteran and one or more veterans (not spouse) who will not be using their entitlement, • the veteran and the veteran’s spouse who is also a veteran, and both entitlements will be used, or • the veteran and one or more other veterans (not spouse), all of who will use their entitlement.”
That means that borrowers who want to purchase a home with other people (who are not their spouses) can purchase real estate. This can potentially create a whole different level of possibilities for servicemembers and veterans.
Veteran/Nonveteran loans can be helpful in a situation where the veteran borrower’s debt-to-income ratio is too high. One caveat to this is that the veteran’s credit score must be acceptable and having a nonveteran borrower involved does not make up for a veteran’s low credit score. On the other hand, a veteran’s high credit score CAN make up for a nonveteran’s low score.
More than two borrowers can be applied in these loans, but additional nonveterans can lead to a requirement for a down payment since the VA does not back loans for nonveterans borrowers involved in the loan.
Although the usual VA rule of requiring the veteran borrower to occupy the home still applies, this type of loan is unique that the nonveteran borrower is not required to occupy the home.
Veteran borrowers can also find the Joint VA Loan helpful in circumstances such as when there is a need for more income in order to qualify for a loan. Having another borrower increases the income needed and can be a viable solution to what may feel insurmountable with a normal VA loan.
If a veteran borrower has their VA entitlement tied up into a previous property purchase, the Joint VA Loan can assist. This loan program allows another veteran to contribute a portion of their eligibility to help the homeowner with the unsold property (for instance, if the homeowner had to rent out the home at a previous duty station). In this instance, the veteran co-borrower would have to agree to live in the home.
One of the greatest advantages of the Joint VA Loan program is the ability to purchase a larger multi-unit property. For example, if three qualified service members or veterans want to purchase property – they can build or buy a property with a total of eight units. The loan allows for four standard units, one additional unit for each VA borrower, and one unit for business purposes. This increases the possibility of a group of veterans being able to purchase multifamily properties. Since the only restriction is that each veteran is required to occupy a unit, this would be an incredible way to house hack. The other units can be rented out and the income used to offset the mortgage payment. Another great benefit is that since the veterans are required to live on-site, the units can be easily self-managed.
Because Joint VA Loans require special underwriting, the veteran’s application must be sent directly to the VA. One of ADPI's loan experts, Jason Wood, stated that "the application process for Joint VA Loans is different than the regular VA loans. Normal VA qualified lenders cannot accept applications and it's incredibly important to have someone experienced in completing them in order to get a Joint VA Loan to closing."
If you're interested in learning more about the Joint VA Loan process, don't hesitate to contact Jason Wood at [email protected]