Joint VA loan with non-veteran, non-occupant partner

Joint VA loan with non-veteran, non-occupant partner

Germany · Member since 2020 · 6 posts · 5 votes

Hello BP Hive Mind.  I don't often post, but certainly find a lot of value in all the discussions.  Now I have a question that I am hoping maybe someone out there has already worked through. 

I am trying to partner with a veteran to purchase a house. He approached me to rent one of my properties, but I don't really have a property that would be suitable for them, so I suggested that they should look at using his VA loan to buy a property. Problem is that their credit score isn't high enough at the moment. So I suggested that perhaps we could partner and find a positive outcome for everyone; they get a suitable place to live and start building some equity and net worth, and I get in to a new property with less money out of pocket. We are still working out exactly what the exit strategy for me will be, and we are working with a Real Estate attorney to make sure everyone is protected as best as possible.

Where I could use some support is finding a lender that will do a joint VA loan with a non-veteran, non-occupant. Has anyone out there done this before and perhaps have a list of lenders they could share that do this type of loan program, or are there any lenders reading this right now that do this? Would appreciate any advice or guidance you can provide. We have a couple of target properties, and a back-up lending strategy will be that I purchase it through my Self-Directed IRA, but I actually have my eye on a campground that I wanted to possibly use the SD IRA to purchase, so trying to avoid that route if possible.

Thanks in advance for any guidance.


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Elias HalvorsonBusiness Member
HI · Member since 2024 · 225 posts · 130 votes
1y

Ken - I specialize in VA loans definitely look at chapter 7 of VA. Pamphlet 26-7. One thing, is if you partner the veteran will still need to qualify for at least 1/2 the payments of whatever property you buy. Also, it will require a 12.5% down payment if you and the veteran are on the loan. I've done a lot of joint loans but none where the non-veteran isn't residing in the house. I would go with a broker and ask them to check with Freedom Mortgage, cardinal financial, or NewRez. For the record there is no minimum credit score for a VA loan. Plenty of lenders lend at 550 or even below. The problem is lenders typically requite 12 months history of on time payments and people don't usually get scores 550 or lower without lates. Hope this helps.

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  • Elias HalvorsonBusiness Member
    HI · Member since 2024 · 225 posts · 130 votes
    1y

    Ken - I specialize in VA loans definitely look at chapter 7 of VA. Pamphlet 26-7. One thing, is if you partner the veteran will still need to qualify for at least 1/2 the payments of whatever property you buy. Also, it will require a 12.5% down payment if you and the veteran are on the loan. I've done a lot of joint loans but none where the non-veteran isn't residing in the house. I would go with a broker and ask them to check with Freedom Mortgage, cardinal financial, or NewRez. For the record there is no minimum credit score for a VA loan. Plenty of lenders lend at 550 or even below. The problem is lenders typically requite 12 months history of on time payments and people don't usually get scores 550 or lower without lates. Hope this helps.

    Elias Halvorson C2 Hawaii NMLS#1697041HI Branch NMLS#1244222 585 Reviews
  • Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    When there are multiple borrowers, the qualifying credit score is the lower-middle credit score of all the borrowers on the loan. In other words, the veteran's credit score would still be the credit score used on the loan. Also, when a non-veteran, non-spouse is joint on a VA loan, there are several nuances involved as well as a minimum downpayment of 12.5%. This is unlikely to work.

  • Derek BrickleyBusiness Member
    Lender · Ann Arbor, MI · Member since 2021 · 686 posts · 232 votes
    1y

    Hey Ken!

    VA is very picky on that, you'd need 12.5% down since the VA will only guarantee the veteran's liability. Do you know how low the veteran's credit is? VA is very flexible on credit and even if they don't qualify for 100% financing now, they may be eligible for something.

    Gold Star Mortgage Financial Group547 Reviews
  • Germany · Member since 2020 · 6 posts · 5 votes
    1y

    Thank you @Elias Halvorson, @Patrick Roberts, and @Derek Brickley for the additional insights and suggestions.  I can bring the 12.5% downpayment; that isn't a big concern.  Elias you are correct that the non-occupant seems to be the biggest stumbling block we keep hitting thus far.  Derek, they had a soft credit check completed today and it came back at 468 I believe.  I'll look for a broker and ask them to check the places that you suggested Elias and see what kind of feedback we get. I really do appreciate each of you taking the time to reply, and doing so in such a quick manner.  BP Forums is always a wealth of knowledge and support.

  • Lender · Cary, NC · Member since 2021 · 122 posts · 29 votes
    1y

    Hi Ken,

    I'm with The One Brokerage and happy to run this scenario by those lenders for you. Let's connect!

    Cheers, Kate

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