The VA loan program is a great way for veterans and active-duty military members to purchase a home with little to no down payment. However, VA loans come with specific eligibility requirements, including those for spouses. If you are a non-borrowing spouse, you may be wondering if you can be included in the purchase contract for a VA loan.

The short answer is yes, a non-borrowing spouse can be on the purchase contract for a VA loan under certain circumstances. Here’s what you need to know:

1. The VA Loan Basics:

A VA loan is a type of mortgage loan backed by the U.S. Department of Veterans Affairs (VA). The VA guarantees a portion of the loan, allowing lenders to offer more favorable terms to eligible borrowers, such as no down payment, lower interest rates, and no private mortgage insurance (PMI) requirement.

To be eligible for a VA loan, you must be a veteran, active-duty service member, National Guard or Reserve member, or a surviving spouse of a veteran who died in service or as a result of a service-connected disability.

2. Non-Borrowing Spouse vs. Co-Borrower:

A non-borrowing spouse is someone who is married to the borrower but is not listed on the loan application or loan documents. A co-borrower, on the other hand, is someone who is listed on the loan application and documents and has joint responsibility for repayment of the loan.

3. Non-Borrowing Spouse Protection Act:

In 2013, the VA issued a new rule called the “Veterans Benefits, Health Care, and Information Technology Act of 2006: Extension of Non-Borrowing Spousal Protections.” This rule allows a non-borrowing spouse to be included in the purchase contract for a VA loan if the following requirements are met:

– The borrower must be a veteran or active-duty service member, and the spouse must be the borrower’s legal spouse.

– The spouse must not be listed as a co-borrower on the loan application or loan documents.

– The spouse must sign a document called the “VA Spousal Certification” to acknowledge that they have no ownership interest in the property and will not be responsible for repaying the loan.

4. Benefits for Non-Borrowing Spouses:

Being listed on the purchase contract as a non-borrowing spouse allows you to be present during the loan application and closing process, ask questions, and have input on the terms of the loan. Additionally, if the borrowing spouse dies, the non-borrowing spouse may be able to assume the VA loan.

5. Limitations for Non-Borrowing Spouses:

Keep in mind that being listed as a non-borrowing spouse does not give you ownership interest in the property or the ability to make changes to the loan terms. Additionally, if the borrower defaults on the loan, the non-borrowing spouse is not responsible for repayment but may still be affected by the foreclosure process.

In conclusion, a non-borrowing spouse can be on the purchase contract for a VA loan if they meet certain requirements, as outlined by the VA Spousal Certification. It’s important to understand the limitations and benefits of being listed as a non-borrowing spouse and to speak with your lender and VA representative if you have any questions.