The VA will guarantee a loan for a veteran and their spouse, but not for anyone else who is a co-borrower with the veteran. In that instance the VA guaranty will only apply to half of the loan. That means half of the loan is financed at 100%, but the other half of the loan will require a 25% down payment. Let’s break down this example of when you would need a down payment on VA loan.
For example, if a veteran wants to buy a $250,000 home with their brother, the veterans half of the loan ($125,000) is guaranteed. But the brother’s half of the loan (also $125,000) requires a 25% down payment, which equates to $31,250.
That being said the same loan with conventional financing may only require a total down payment of 5%, which would be $12,500. Granted, they’ll be forced to pay private mortgage insurance. In addition, the rate will likely be higher than what they would qualify for with VA. However, if keeping out of pocket costs low is paramount this may be the best option.
Which I’m sure at this point you’re asking, “Well, how much are the VA closing costs anyway”.