Qualifying for a VA Loan May Be Easier Than You Think

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A recent survey by the National Association of Realtors (NAR) revealed that homeownership rates are higher among veterans and active military than those who have never served, especially within younger age groups. So, why are military personnel outpacing their non-military peers when it comes to owning a home? There are many possible explanations, but the impact of VA Loan benefits is certainly a factor. Of those surveyed by NAR, 54 percent of veterans and 74 percent of active military said they used VA Loans to finance their home purchase.

military momVA Loans provide a means for active service members and eligible veterans to buy a home at a competitive, fixed interest rate—often without a down payment. So, what does it take to qualify? It may be easier than you think! Let’s take a closer look at the basics of VA Loan eligibility:

What are the service requirements?
You may be surprised to learn that it doesn’t necessarily take years of service to become eligible for VA Loan benefits! If you are active duty military, you must have actively served for 90 continuous days to be eligible for a VA Loan. As a veteran, you must have been discharged under conditions other than dishonorable discharge and you must meet service requirements depending upon when and where you served. See a complete list of service requirements here.

Even if you don’t meet the minimum service requirements, you may still be eligible if you were discharged due to hardship, the convenience of the government, reduction-in-force, certain medical conditions, or a service-connected disability.

What types of properties are eligible?
To use VA financing, the property must be your primary residence. VA Loan benefits do not extend to vacation homes or investment properties. In addition to buying or building a home, you can also use VA Loan funds to refinance or improve your home, including energy efficient upgrades.

How high does my credit score need to be?
Although the VA doesn’t require a certain credit score, the private lenders, who ultimately grant the loans, require a minimum FICO score. But, don’t worry – there’s some breathing room here. The required score may be as low as 600, which falls more in the range of “Fair” credit, rather than “Good” or “Excellent.” Check with your lender to verify the required score.

What are the income requirements?
Unlike many government-guaranteed mortgage programs, the VA does not set a maximum income limit for qualifying VA Loan borrowers. However, there is a minimum amount of residual income required. Residual income is the amount of money left over each month after all major expenses are paid. As an active military member, you may be able to include some of your military allowances and special pay in this total, which will help keep your debt-to-income ratio lower.

Do I need a Certificate of Eligibility (COE) & how do I get it?
The COE is the official document that verifies to your lender that you have met the eligibility requirements for a VA-backed loan. You can apply for a COE through a lender who participates in the VA Home Loan program. The lender will advise you on what documentation must be included with the application. You also have the option to apply for a COE online through the eBenefits portal or you can complete Form 26-1880 and mail it to the VA Loan Eligibility Center.

What’s the easiest way to get started?
The VA Loan application process may seem complex but it doesn’t have to be difficult. Consult a loan advisor who participates in the VA Home Loan program and understands the requirements, the documents, and the process. We are here to help and we are honored to serve those who work hard to protect our freedom. Contact a loan advisor near you to get started today!

By Amy Malloy

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