Married military couples have some choices when it comes to using their VA home loan benefits.
Eligible spouses can decide to use all of one spouse’s entitlement for a VA loan, split their entitlement evenly for a joint VA home loan, or have one spouse use remaining entitlement from a previous VA home loan with the other spouse providing the rest for the new mortgage. Entitlement is basically the dollar amount the VA pledges to repay if the borrower defaults. On most loans above $144,000, the entitlement is a quarter of the purchase price or about $104,000, whichever is less.
You can read our earlier post to learn more about VA loan entitlement in general. Now’s the time to get started on your VA home loan — start today.
The first option, involving using just one spouse’s entitlement, allows the couple to save the other partner’s entitlement for future use. In this case, the spouse who is not applying for the loan would only have a financial obligation if he or she co-signed or co-borrowed on the mortgage or if the loan was executed in a community property state.
Mil-to-mil couples can also split their entitlement evenly for a joint VA home loan, meaning each person is financially responsible for half the mortgage. The loan itself would be made up of equal parts of VA loan entitlement from each party listed on the mortgage. Such loans do not require prior approval from the VA.
One of the other options for married military couples is to combine the remaining entitlement of one spouse from a previous VA home loan with the rest of the entitlement coming from the second spouse. If one member of the couple previously purchased a home with a VA loan and lacks full entitlement but has some to use on the new loan, this is a good option for the couple.
For combined loans, both spouses will have to meet credit and underwriting requirements. Although one borrower’s weakness can be compensated by the other borrower’s strengths when income and assets are reviewed, the same does not apply for credit scores. The VA makes it clear: “Satisfactory credit of one veteran cannot compensate for the other’s poor credit.”
Mil-to-mil couples must follow occupancy rules just as any other homeowner using a VA loan.
Veteran couples are prevented from using their entitlements separately to buy two homes at once because they are subject to occupancy requirements.
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