If you get an offer for an affordable house, it would be a shame to miss it. On the other hand, you don’t have enough money to buy it in cash or want to apply for a home loan but your credit score hinders you. You may consider using a co-signer and you will be the one paying the monthly installments. But, can a parent cosign on a VA loan?
Let’s find the answer by digging up the information through the discussion below!
What Is a Co-Signer?
A co-signer is someone willing to sign the loan for the primary borrower if they are unable to complete the loan payments. Being a co-signer means you are ready to take financial responsibility if the primary borrower fails to pay the mortgage. Even though you don’t live in the house, you have to pay the missed loan.
The contract is binding and has legal force. Consequently, you will deal with the law if you don’t want to pay the missed loan because you signed the loan contract. Typically, they want to be co-signers to help families who want to purchase a house. Given the huge responsibility of a co-signer, ensure to consider it carefully first.
What are the Requirements to Become a VA Loan Co-Signer?
Although you can have a co-signer to apply for a mortgage loan, not everyone is eligible to be a co-signer. Below are some eligibility criteria to become a co-signer.
- The co-signer and borrower must have an excellent credit history and be able to demonstrate it.
- Co-signers are unmarried military members or military spouses.
- Borrowers and co-signers are required to have stable income because it is related to the ability to pay the loan.
- Both the borrower and co-signer are willing to provide required documents such as tax returns, proof of payment, and necessary bank statements.
So, can a parent cosign on a VA loan? Yes, as long as the parent has an excellent credit score and stable income, you can appoint him as a co-signer. A significant point to remember is that co-signers must consciously understand their obligations and responsibilities before signing a VA loan contract.
To prevent conflicts that might arise in the future, ensure the primary borrower and co-signer communicate honestly and transparently. That will give the co-signer peace of mind and not feel disadvantaged.
What Are the Possibility of Being Approved If You Have A Co-Signer?
Asking a family member who meets the requirements to become a co-signer has a high chance of getting a VA loan approval. Lenders consider a co-signer to be a sufficient layer of security for the loan you are applying for.
Thus, a co-signer can lower the risk of loss to the lender if the primary borrower fails to pay the loan. Correspondingly, the opportunity to procure VA loan approval is also wide open if the co-signer meets the income ratio, good credit history, and stable income.
Even though having a co-signer enhances the opportunity of your VA loan being approved, you cannot use it as a definite guarantee. Lenders will still evaluate and consider some factors. The factors referred to include loan credit history, ability to repay the loan, and credit score.
Alternatives To Having a Co-Signer
If you are not sure whether you are worthy of getting a VA loan even though you have a co-signer, there is no need to be discouraged because you can choose the following alternatives. Check them out!
1. Work on Your Credit
A bad credit score often becomes an obstacle for those who want to get a VA home loan. If you have a similar issue, then take your time first. To strengthen your credit score, you can work on your credit by paying it off right away. Along with that, you can also limit your credit card use so as not to increase your debt ratio.
Reducing credit card use and paying off debt will give a significant boost to your credit score. Once your credit score strengthens, you will be more confident in applying for a home VA loan.
2. Look for Government-Backed Mortgage
The discussion above may provide a “yes” answer to the question “Can a parent cosign on a VA loan?”. Yet, parents as co-signers do not guarantee that your VA loan application will be approved because it must meet eligibility criteria.
In this case, you can take the alternative of looking for a government-backed mortgage. Generally, government-backed mortgages provide more affordable down payment requirements or even 0%. Other alternatives to a home VA loan include USDA for those who live in rural areas or FHA.
3. Seek Homeownership Programs and Down Payment Assistance
If you still have a low income when you apply for a home loan, then your chances of getting approval are slim even if you have a co-signer. Lenders will be more concerned about your ability to pay the loan. As a solution, you must be willing to make extra effort to look for a homeownership program or down payment assistance.
Typically, government housing agencies offer special mortgage programs for those with low incomes to be able to purchase a home. Additionally, non-profit organizations or government housing agencies also offer grants to help you make a down payment.
4. Strong Work History
Before providing a loan, lenders will assess your work history. Ensure you do not change jobs within a short period of time because it will affect your eligibility to get a loan. To get a strong work history, the lender will check you over two years. If you work in the same industry during that time, the chances of getting a loan are higher.
Does The Post Can a Parent Cosign on A VA Loan Enlighten You?
To put it briefly, a VA loan is a mortgage loan for living military members or veterans. You can use a VA home loan to purchase a house with an affordable down payment. However, if you still have other ongoing loans, you can use a co-signer to assist you.
Can a parent cosign on a VA loan? The article above has clearly explained how a parent can become a co-signer as long as they meet the eligibility requirements. Furthermore, as the primary borrower, you also have to meet the eligibility requirements to obtain approval from the mortgage lender.
