Financing in Billings>Question Details

jstafit, Home Buyer in Billings, MT

Can I get a multi-family VA loan... using a combined income.

Asked by jstafit, Billings, MT Fri Jan 18, 2013

My daughter and her family and my wife and I are considering buying/building a 2 family dwelling! It will be one dwelling, but designed like a duplex. They will live in one side and we in the other! My daughter and her husband's income is 100,000... and ours $36,000 (retired and fixed income). however, her credit is damaged...she is in the process of repairing it! ), ours is very good. We need to use her income and our credit! Is that possible?

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Sorry, As Fred has already answered, you can't use someones income without taking their credit into consideration as well.
1 vote Thank Flag Link Fri Jan 18, 2013
Sorry, let me rephrase my question. If my daughter has a credit score below 600 due to past problems, and we have outstanding credit, would that be considered? We understand that to combine incomes ,both parties would have to be approved.
Flag Fri Jan 18, 2013
There are a number of ways to structure this to make it work. It is really a banking question, related to mortgage qualification. Find a lender who is well versed in VA loans and he/she will likely be able to help you get qualified. In the meantime, there are a number of things that can be done to repair credit.
Good Luck! Andy Onushco, owner of Andy O Realty, Keller Williams Capital Realty, Helena MT.
0 votes Thank Flag Link Mon Jan 21, 2013
Ah, yes, thanks for the correction.
0 votes Thank Flag Link Fri Jan 18, 2013
Thanks Jonathan.

FYI, more than 4 units is considered commercial financing ... 1-4 units is considered residential.
0 votes Thank Flag Link Fri Jan 18, 2013
Shane's answer seems to vibe with what I have heard.

To know for sure, I recommend talking to a local lender.

Unless it is more than 5 units, I believe it is generally still considered single family for residential loans.
0 votes Thank Flag Link Fri Jan 18, 2013
jstafit - glad I could help. Then it sounds like 100% financing should be possible... since you said your daughter is the one with the poor credit, but your son-in-law is the one who has VA eligibility... how is his credit? Could just you/your spouse/your son-in-law qualify without your daughter's income?

Also, I know there is the "reply" option, but when you "reply" no one gets notifications that you have replied... so please just hit the "answer question" button and put your response there, so that way everyone who has responded so far will be alerted that you have provided follow up information.
0 votes Thank Flag Link Fri Jan 18, 2013
All people's credit is considered - meaning that the worst credit situation of all borrowers still has to be able to pass guidelines... as well as it also means that someone who has excellent credit can make an underwriter feel more comfortable about the loan request than if only the person with bad credit was applying. But someone with excellent credit will not make the underwriter overlook the person who has bad credit.

However VA loans have varying requirements when there is more than 1 borrower on the loan, because it depends on what everyone's relationship is to each other, as well as if there are families going on the loan who are not veterans. A question similar to yours was just asked at…

My question to them, slightly rephrased to fit your situation, is:

How many people would actually be applying for the mortgage (be borrowers on the mortgage) in the situation you are describing?

If it's a veteran (like your daughter, or her husband is a veteran) & their spouse (who is a non-veteran, or who is a veteran but not using their VA entitlement) AND you or your wife are a veteran then it can be processed like a normal VA loan, with up to 100% financing/no down payment being available.

However if it's a joint loan with the veteran & another non-veteran (not spouse), or other situations, then a down payment could be required on the non-guaranteed portion. This may be difficult to understand, but VA will only guaranty 25% of the veterans portion of the loan - so if it's a veteran, their spouse, and then two other non-veterans (like you are a veteran, but your daughter or her husband is not), then VA will only guaranty the veteran's portion of the loan. Lenders require that VA guarantees 25% of the loan in order for there to be no down payment requirement, otherwise a 25% down payment is required on the non-guaranteed portion.

So if you are a veteran but your daughter (nor her spouse) is a veteran, then in the situation where you are purchasing a home, a 16.666% down payment would be required on the sales price ... i.e. on a $100k sales price, a $16,666 down payment would be needed ... because if only $33k is guaranteed (you and your wife's portion), then 25% of the remaining $66k equals $16,666. Confused yet? If not, then that is great... but if you are, then don't worry because this is fairly complicated stuff. And if you are confused, then ask more questions about whatever exactly you are confused about.

Shane Milne | Lending in all 50 states | NMLS #81195
0 votes Thank Flag Link Fri Jan 18, 2013
Flag Fri Jan 18, 2013
Sorry, not possible. All people's income that are used must have credit used. It's been this way for years.
0 votes Thank Flag Link Fri Jan 18, 2013
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