Can a Non-Veteran Be on a VA Loan?
Understand the specific scenarios where non-veterans can be involved in VA home loan benefits, including co-borrowing and surviving spouse eligibility.
The VA home loan program offers a significant benefit designed to help eligible service members, veterans, and certain surviving spouses achieve homeownership. This program aims to make purchasing a home more accessible by providing favorable terms, often including no down payment requirements and competitive interest rates. While primarily intended for those with military service, specific situations allow for non-veteran involvement in a VA loan.
General Eligibility for VA Loans
Eligibility for a VA loan is tied to a veteran’s service history, meeting specific length and discharge status requirements. Active-duty service members typically become eligible after 90 days of continuous active service during wartime or 181 days during peacetime. National Guard and Reserve members generally need six years of service, or 90 days of Title 32 orders with at least 30 consecutive days.
A veteran’s discharge status also plays a significant role in determining eligibility. Acceptable discharge types include honorable, under honorable conditions, and general. The foundation of the VA loan benefit is known as entitlement, which is the dollar amount the Department of Veterans Affairs guarantees to a lender if a borrower defaults. This entitlement helps determine how much a veteran can borrow without needing a down payment.
Non-Veteran Spouses as Co-Borrowers
A common arrangement involves a non-veteran spouse co-borrowing on a VA loan with an eligible veteran. This arrangement is generally permitted. While the VA loan benefit is primarily linked to the veteran’s entitlement, the non-veteran spouse’s income and credit history are considered by the lender.
Lenders assess the combined income and debts of both the veteran and their spouse to determine the overall loan amount. Despite the non-veteran spouse’s involvement, the loan remains primarily guaranteed by the veteran’s entitlement, and typically no down payment is required. Both parties are expected to occupy the home as their primary residence.
Non-Veteran Non-Spouses as Co-Borrowers
Co-borrowing with a non-veteran who is not a spouse presents a more complex situation for a VA loan. This arrangement, often referred to as a “joint VA loan,” is possible. The Department of Veterans Affairs will only guarantee the veteran’s portion of the loan.
Because the non-veteran’s portion of the loan is not guaranteed by the VA, a down payment is typically required to cover this unguaranteed share. Lenders also apply more stringent underwriting, independently evaluating the credit and income of both the veteran and the non-veteran co-borrower. Both co-borrowers are usually required to occupy the home as their primary residence.
Non-Veteran Surviving Spouses
A non-veteran can independently qualify for a VA loan benefit as a surviving spouse under specific criteria. Eligibility arises if the veteran died while in service or from a service-connected disability. Eligibility also extends to surviving spouses if the veteran was totally disabled from a service-connected disability and died from non-service-connected causes, provided the veteran was receiving or was entitled to receive compensation for at least 10 years immediately preceding their death.
Additionally, a surviving spouse who remarries after reaching age 57 may retain their eligibility. To establish this eligibility, the surviving spouse must obtain a Certificate of Eligibility (COE) from the VA. This benefit allows eligible surviving spouses to access the advantages of a VA loan, including competitive interest rates.
Financial Aspects of Non-Veteran Involvement
The involvement of a non-veteran in a VA loan can impact certain financial aspects, particularly the VA funding fee and the usage of the veteran’s entitlement. The VA funding fee is a one-time charge paid to the Department of Veterans Affairs. While most VA borrowers pay this fee, exemptions exist for certain individuals, including veterans receiving VA compensation for a service-connected disability and surviving spouses receiving Dependency and Indemnity Compensation (DIC).
When a non-veteran who is not a spouse co-borrows, the funding fee structure can differ. The fee is applied only to the veteran’s portion of the loan, and the non-veteran’s share may be subject to separate financing costs or down payment requirements. In such joint loan scenarios, only the veteran’s portion of the loan is guaranteed by the VA, meaning their entitlement is applied solely to their share, often resulting in a down payment for the non-veteran’s part.