Does a FHA/VA Combo Loan Still Exist?

I have been unsuccessful finding information regarding a FHA/VA Combo Loan, which leads me to believe this program no longer exists. We have a Veteran that wants to use his entitlement to qualify for a VA Loan, which is not the issue. However the Veteran would need to add a co-borrower to the loan to be able to meet the minium income standards. The co-borrower is not a spouse of the Veteran. Is there a program out there that would allow the VA to guaranty a portion of the loan, and combine it with the co-borrower's FHA loan?

I too have never heard of a VA/FHA Combo. I believe you are referring to what is called a joint loan. When applying for a VA mortgage loan, you have a variety of options--you can apply alone without a co-signer or co-borrower, you can apply for a VA loan with your spouse, or you can choose to apply for a joint loan with a co-borrower who is not a spouse or a military member.

The VA allows joint loans under the right conditions. On a joint VA loan, the VA guaranteed portion of the loan is only extended to the veteran. The non-military applicant is applying without the benefit of a VA guarantee on his or her portion of the loan. While there are plenty of loan officers willing to work with you and a non-military co-borrower, you might have to look a bit harder for a lender for this type of VA home loan. The bank may require a down payment on the non-guaranteed part of the loan, so you and your co-borrower should be prepared financially for that expense.

With a joint loan, both you and your co-borrower can list your income and credit information on the VA mortgage application. As always, the credit status of your co-borrower affects the status of the VA home loan application; be sure to address debt-to-income ratios and other credit information that could affect your application. Check credit reports for yourself and your co-borrower a year before you want to commit to a VA mortgage. That will give you enough time to fix any problems you may encounter before applying for the loan.

Joint VA loans are different than some other VA loan products. When applying you'll be asked to show income sufficient to cover your half of the joint loan. A civilian co-borrower isn't permitted to carry most or all of the financial responsibility for the mortgage. Another way joint VA home loans differ from standard VA mortgages--the lender must submit joint loans to the VA for approval before the loan is issued.

Remember that joint VA loans are for military members who want to buy a home with a civilian co-borrower, but if you are married you can apply for a VA mortgage the conventional way. Spouses are not considered "non-military co-borrowers". You can list your spouse on your VA loan application and apply with no additional stipulations. If you want to buy a home with a brother or sister, the joint loan would be the way to go.

- Dawn P. - Jun 16, 2015 at 4:12PM
2 Answers

In 15 years in the business, I've never heard of a "combo FHA/VA" loan. I seriously doubt they exist, if they ever did in the first place. Totally separate programs, guidelines, and eligibility requirements.

The program that I believe you are thinking of does not exist any longer. The program was the "Veteran's Preference" option on the FHA 203B program. It was not a VA program and VA did not guarantee the loan. It was discontinued about 10 years ago.

The Veteran's Preference option allowed an eligible veteran to get an FHA loan with a reduced down payment requirement. Eligibility for Veteran's Preference was determined by a completed Certificate of Veterans Status (VA 26-8261).

Here is a link to a Mortgagee Letter that described the program.