Can you have a Co-signer on a VA Loan? Many people have this question in mind.
While VA loans don’t have strict requirements, some people might not qualify for a loan. Can I get a co-signer for a home loan? Whether you have problems with your credit score or DTI ratio, don’t let this issue overwhelm you. You can still get your funds with a co-signer for a loan, an option that will get you approved. Can you use a co-signer for a home loan, and what are the requirements? In this post, we offer helpful information about this topic. Once you go through it, you will have it all clear.
Can you have a co-signer on a home loan?
If you struggle with a high debt-to-income ratio or face financial difficulties, you can always include a co-signer in your application. Unlike traditional loans where anyone can become a co-signer based on their willingness, you need a co-signer eligible for VA loans for these loans. This person needs to be your spouse or VA borrower, to meet the eligibility requirements to become your co-signer. If you aren’t married, any person eligible for a VA loan can become your co-signer.
A co-signer will take the financial obligation in case you can’t make the payments. It is one of the methods to secure a loan when an individual does not meet the lender’s requirements. In the unfortunate event of a default, this will impact both credit scores.
When to include a co-signer
When you know that you can have a co-signer on a VA loan, when should you use this? Traditionally, people rely on a co-signer when they have a bad credit score. A co-signer will help them secure better interest rates and save money. However, this isn’t the case with VA loans. These loans have loose requirements for credit score, so you might not need a co-signer.
- If you need to include a co-signer, be aware that the financial institution will assess their creditworthiness. First, you need to make sure that they meet the main criteria, such as being eligible for a VA loan.
- Only include co-signers with better credit scores or income than you do so that your application will be stronger. If your co-signer has a lower income or credit score than you do, including them would only hurt your application.
- Before you include your co-signer, make sure that they check their credit history. A co-signer can be rejected if they have co-signed on another loan. Or if they have had financial obligations as a co-signer.
Difference between co-signer and co-borrower
Even though they might sound similar, a co-signer and a co-borrower aren’t the same. A co-signer is a person that will take the financial obligation to pay the mortgage in case you can’t. However, they don’t get included in the title.
The main difference between a co-signer and a co-borrower is that co-borrowers claim a part of the home’s equity. On the other hand, a co-borrower has the benefit of owning a portion of the property’s equity. While the co-borrower shares the financial obligation, they also possess a portion of the home.