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VA Home Loan Requirements

Meeting the requirements for a home loan shift when using your VA benefits.

VA home loans are insured by the U.S. Department of Veterans Affairs. They offer 100% financing and no mortgage insurance, making them a great option for members of the U.S. Armed Forces who serve to protect our security. The Department of Veterans Affairs doesn’t issue the loans. Rather, borrowers acquire a loan by applying for a mortgage with a VA-approved lender.

GETTING A VA LOAN

How to Qualify for a VA Home Loan

To qualify for a VA home loan, you must be active duty military, an honorably discharged veteran, or a military service member of the reserves or National Guard. Eligible surviving spouses of service members may also apply for a VA loan. To get approved, you must purchase a primary residence and obtain a valid Certificate of Eligibility from the VA. This form confirms your VA loan eligibility.

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VA Loan Requirements

VA home loans are attractive because they don’t require down payments for a home purchase, as long as the appraised value of a home isn’t higher than the VA loan limit for the area. VA loans also don’t require private mortgage insurance, which is common with many loans without 20% down. The VA also limits how much a borrower pays in closing costs. These loans can be used by first-time home buyers and repeat buyers.

VA Loan Service Requirements

Eligibility for a VA home loan is based on your service record. You may be eligible if you’ve served at least 181 days of active duty during peacetime; 90 days of active duty during wartime; or at least six years in the Reserves or National Guard.

VA Loan Property Requirements

VA home loans must be used for the purchase of a primary residence. This can include the purchase of a single-family house, townhouse or condominium in a VA-approved complex. These loans can also be used to construct a new home and purchase a manufactured home and lot. There’s also the option to refinance an existing VA loan. Refinancing is an option if you want to get a lower interest rate, reduce your monthly payment, cash out your equity, or refinance from a conventional or FHA loan to a VA mortgage.

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VA Loan Credit and Income Eligibility

The VA doesn’t set a minimum credit score requirement for a VA loan. However, some lenders may only approve borrowers with a credit score of 620 or higher. To be eligible for a VA loan, your income must also be consistent and stable. You need to provide your most recent pay stubs, tax returns from the last two years, and information about other income sources (alimony, child support, rental income, self-employment income, etc.)

VA Loan Entitlement

VA loan entitlement is the amount the U.S. Department of Veterans Affairs guarantees to mortgage lenders in the event of borrower default. The VA guarantees all loans up to four times the entitlement. The standard VA entitlement is $36,000 or 25% of the loan amount. For example, a loan entitlement of $36,000 guarantees up to $144,000. For loans greater than this amount, the entitlement is 25% of the loan amount. A borrower’s entitlement determines how many VA loans they can have at one time.

How to Get Your Certificate of Eligibility

The Certificate of Eligibility (COE) is proof that you’re eligible for a VA home loan. It also includes the amount of basic entitlement you’re eligible to receive. VA home loans also involve a funding fee. The certificate will state whether you’re non-exempt or exempt from paying this fee.

Documents Required for COE:

You can apply for a Certificate of Eligibility through your private lender, by mail or online using the eBenefits portal. Documents needed to apply include a copy of discharge or separation papers if you’re a veteran or a former National Guardsmen or Reservist. Current active duty service members, National Guard members and Reservists must provide a Statement of Service signed by their commander.

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Apply for a VA Loan

Ready to apply? Speak with a VA-approved mortgage lender about eligibility requirements. Our team of loan experts is experienced with VA loans. We aim to make the mortgage process as simple as possible.

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