Married? Military? Know These VA Loan Guidelines

Gina Freeman
Gina Freeman
The Mortgage Reports Contributor
December 19, 2016 - 4 min read

Vast Majority Of Military Home Buyers Are Married

The VA home loan program offers a number of unique advantages over other loan types.

An FHA loan requires 3.5% down, and a conventional loan, 3 to 20 percent. But the VA loan offers 100% financing to current and former service members of the U.S. Armed Forces.

Home buying benefits extend beyond the service members themselves in many cases. Spouses of veterans and active military members enjoy zero-down home buying, as long as the eligible individual is part of the transaction.

A survey by the National Association of REALTORS® found that 64 percent of civilian home buyers are married, while 78 percent of military buyers purchase a home with a spouse.

Applying for a mortgage when you’re married can offer advantages, and in a few cases, challenges, compared to buying when single. And applying for a VA mortgage comes with a more considerations still.

But if you’re married, currently or formerly part of the military, and looking to buy a home, it’s possible to afford more home than you could on your own.

VA Mortgage : If You’re Married, You’re Both Eligible

Members of the Army, Navy, Marines, Air Force, and Coast Guard typically marry someone outside of the armed services.

Fortunately, VA mortgage loan guidelines address this common occurrence. Both applicants on a VA home loan need not be VA-eligible to get the full benefit of the program — as long as they are married.

They get the full guarantee as long as one of them has a Certificate of Eligibility (COE), the document that verifies that the buyer has fulfilled the military service requirement.

Both spouses can apply for the mortgage, and both of their incomes can be used to qualify. A dual income increases the purchase price for which a couple can be approved.

The VA loan benefit also transfers to surviving spouses who have not remarried, or some who remarry after the age of 57.

Marriage can work in your favor when applying for a loan, but it can also cause some challenges. Most of them can be remedied if you know how VA lenders look at these situations.

Buying Amidst A Military Transfer

Transfers are a way of life in the military, and they can derail the home buying process if one spouse gives up a job to move.

This wife or husband who follows the transferred individual is called a “trailing spouse.” Mortgage guidelines specifically address trailing spouse income within written guidelines. Lenders count income in one of two cases.

  • The employer confirms that moving will not affect income
  • The spouse secures employment at the new location

In the second scenario, the company must verify employment via a letter describing the job title, start date and salary. The new job can only be counted if the spouse has at least a two-year history in that line of work.

Still, these rules can make the difference when VA loan applicants plan to buy a home in the military member’s new location.

When The Spouse Has A Low Credit Score

Nearly all mortgage programs adhere to a credit score rule in which the lower of both spouses’ FICO scores is used for qualification. The lower score is called the “representative” credit score.

For example, in the following case, 689 would be the representative credit score.

  • Eligible veteran’s credit scores: 678, 689, 719
  • Spouse’s credit scores: 709, 722, 734

The eligible veteran’s middle score is used for qualification purposes since it is the lower of the two middle scores on the application.

However, it’s a fortunate fact of VA home loans that there is no minimum credit score requirement. The VA’s guidelines state that applicants’ credit history can be considered satisfactory if they have paid their accounts on time and not incurred major derogatory credit in the last 12 months.

That being said, most lenders set a minimum score for VA lending between 550 and 620. If your spouse’s credit score is too low for lenders, you have the option of applying for a mortgage in your name only, as long as you are the eligible veteran.

Your spouse’s credit score and debts won’t be counted on the application, as long as you don’t live in a community property state. But if you do, the rules are as follows in the following section.

Guidelines Within Community Property States

Lenders in community property states view loan applications differently.

The VA Lender’s Handbook says, “In community property states, information concerning a spouse may be requested and considered in the same manner as for the applicant, even if the spouse will not be contractually obligated on the loan.”

Community property states are as follows.

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

In these states, assets married couples acquire during their marriage are considered joint property, and liabilities incurred by either spouse may obligate them both.

That is an extra concern for mortgage lenders, and most want to know that the non-borrowing spouse does not add too much to the debt burden of the family.

For instance, the eligible veteran easily qualifies for a home loan because she has just $10 per month debt obligation from one credit card.

The spouse, however, has a car payment of $500 per month.

If the car payment increases the debt-to-income ratio of the loan beyond acceptable levels, the lender could turn down the loan.

If you’re in a community property state and want to keep your spouse off your mortgage application, you might be better off with a conventional (non-government) home loan.

What Are Today’s VA Mortgage Rates?

VA home loan rates today are low, much lower than those of conventional loans. This is why these mortgages are a favorite among the military community.

Get a VA loan rate quote, which does not come with any obligation, but does come with your live credit scores. You don’t need to disclose your social security number to get started, and requesting a quote takes just minutes.