Can my spouse use my VA loan without me?
The VA does not allow military spouses to apply for loans on their own. Almost always, the principal borrower has to be the VA-eligible Veteran. Nonetheless, widows and widowers who have not remarried and whose spouse passed away in the line of duty or as a result of a disability related to their military service may qualify for a VA loan.
Can a spouse be added to a VA home loan?
Spouses may be added to a VA loan as co-signers or co-borrowers, yes. To make the most of their homebuying budget and raise their loan limit, many veterans and service members decide to include their spouse’s income.
Lenders often only consider income from borrowers who are listed on the loan. However, military spouses who are borrowers must also adhere to VA and lender requirements regarding credit, debts, income, and other factors. If a military spouse is named as a borrower on a VA loan, they will be accountable for paying back the loan.
However, adding a co-borrowing spouse may also have unfavorable consequences. Spouses who struggle with debt or credit may cause more harm than good. Veterans who make enough money in this situation should choose to be the only borrowers.
It’s crucial to understand that the military spouse is referred to as the “non-purchasing spouse” if they are not listed on the loan. ”.
Can a non-purchasing spouse be on a VA loan?
Most of the time, non-purchasing spouses can be included on the VA loan without any consideration of their financial situation. On the other hand, lenders may take into account the credit and debts of a non-purchasing spouse in some states known as community property states.
As of November 2023, the nine community property states include:
Guidelines on community property states can vary by lender. Veterans United currently considers the obligations and debts of the non-purchasing spouse in community property states, which are taken into account when calculating the loan file’s total debt-to-income ratio and residual income. In states where community property exists, we must also take non-purchasing spouses’ judgments or liens into account.
Military Spouse Credit Requirements
Each borrower on a VA loan must fulfill the derogatory credit requirements for VA loans as well as the minimum credit score set by the lender. Those benchmarks can vary by lender and other factors.
Lenders base their rate quote for borrowers with multiple loans on the borrower with the lowest score. It is not possible for a veteran with excellent credit to make up for a co-signing spouse whose credit score is below the lender’s cutoff, and vice versa. Both borrowers either meet the requirement or don’t.
Although most mortgage lenders prefer to see a FICO credit score of at least 620, the VA does not set a minimum credit requirement. If a potential customer doesn’t fit our credit requirements, Veterans United provides free credit counseling. Our credit specialists will offer a strategy to raise your scores so you can get a mortgage.
While your credit score is a crucial factor, lenders are also monitoring your credit report for adverse items such as judgments, bankruptcies, foreclosures, liens, collections, and more. If you have any of these judgments or debts, you might have to pay them off before moving forward or face mandatory waiting periods.
Military Spouse Income and Debt Considerations
Lenders look at the combined debt-to-income (DTI) ratio and residual income, but they do not look at the credit scores of each co-borrower separately.
The relationship between your monthly gross income and major debts is known as your debt-to-income ratio, or DTI ratio. Most borrowers with a DTI ratio over 41% will be subject to more onerous requirements, according to VA guidelines; however, maximums may differ depending on the lender and your particular circumstances.
The VA wants to ensure that you have a certain amount of money left over each month after paying for your major expenses, such as your new house payment, through residual income. The amount of residual income depends on the size of the family and the retailer.
Military spouses may need to provide:
- two most recent W-2 tax statements
- most recent paystub
- Any information about their financial assets
Generally speaking, federal tax returns are not required unless you are self-employed or wish to include income from unusual sources like rental properties.
Requirements for borrowers who work part-time jobs or are self-employed are frequently more stringent than those who work full-time. Commission and overtime pay can also complicate things.
Military Spouses and Employment Stability
Income stability is a key factor for VA lenders. Every lender wants to be confident in your ability and willingness to return the loan. If you are going to be on the loan, lenders will want to confirm your employment even if you are moving to a new state or community as part of a PCS move.
Usually, you have to work remotely or have a job lined up in the new place. Lenders will closely examine how a new job you’re getting relates to your prior work experience or educational background. If lenders believe there isn’t enough continuity between your previous experience and your new job, they might not be willing to count your new income right away.
It’s best to speak with a loan officer as soon as possible if you intend to change jobs in order to buy a house. Avoid going too far down the road before finding out that your income won’t qualify for the new loan.
Military Spouse Occupancy Requirements
Like all government-backed loans, VA loans come with occupancy requirements. Borrowers who are veterans or active military personnel must plan to move into their new home as their primary residence, usually within 60 days of the closing date.
Most of the time, military spouses are unable to satisfy their veteran or military buyer’s occupancy requirements alone. If borrowers of VA loans who are on active duty plan to make the house their primary residence prior to moving, they may be eligible for an exemption.
In addition, some lenders might stipulate that military spouses who are co-borrowers on the loan must adhere to the occupancy requirements. Lender policies may differ in this regard, but Veterans United does not currently require it.
Military Spouses and Power of Attorney
The Power of Attorney (POA), which enables Veterans and service members to name another individual as their “attorney-in-fact” to sign legal documents and carry out contracts on their behalf, including applying for and closing on a VA loan, is well-known to many military spouses.
There are two types of POA: General and Specific.
| General POA | Specific POA |
|---|---|
| Attorney-in-fact can make a wide range of financial decisions for the Veteran or service member | Attorney-in-fact is limited in what they can execute on for the Veteran or service member |
| Common when a Veteran or service member can sign either the loan application and the purchase agreement or all closing documents | Only permitted when a Veteran or service buyer cannot be present for any part of the process |
| – | Requires more information from the Veteran or service member |
For the transaction to proceed, the VA needs the verbal and frequently written consent of the Veteran or service member in either a General POA or a Specific POA.
How does divorce impact a VA loan?
You are not eligible to apply for a new VA loan using the eligibility of a veteran or service member if you are already divorced from them. Your next course of action in a divorce where you and your co-borrower are co-borrowers will likely be determined by your attorney and lender
How Spouses Affect VA Loans
Military spouses can be co-borrowing, non-purchasing, or surviving spouses on a VA loan; however, in all cases, they must present their lender with pertinent financial data and their clear intentions. For additional information regarding your particular situation, military spouses can contact a Veterans United VA loan expert at 855-870-8845.
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FAQ
Can a spouse take over a VA mortgage?
Veterans’ loans can be transferred by divorcing spouses. As long as the ex-spouse was a joint borrower prior to the divorce, the veteran can request a release of liability if they wish the spouse to take on the mortgage.
Can a widow use her husband’s VA loan?
Three home loan guarantee programs are available from VA to qualified surviving spouses of veterans and active duty personnel. These programs can be used to build, buy, or renovate a home or to refinance a mortgage.
Can you let someone else use your VA loan?
Yes, VA loans allow co-borrowers on the loan. A veteran and their non-veteran spouse, two married veterans who only use one of their entitlements, two married veterans who use both of their entitlements, and two non-married veterans who use both of their entitlements are all acceptable co-borrowers.
Can a family member use my VA loan?
Yes, this is possible. Actually, not just family members may be eligible for a VA loan to purchase a property. Anybody with a clean credit record can assist a veteran in utilizing their VA benefits by adding them as a co-borrower or just as a co-owner of the property.
Read More :
https://www.veteransunited.com/valoans/military-spouses-and-va-loans/
https://www.rocketmortgage.com/learn/va-loan-spouse-requirements