If you are an active-duty service member or a veteran who has honorably served your country and have always dreamed of owning your own home, then a VA loan may be the answer.
Quick Eligibility Checklist
You generally meet VA loan requirements if you fall into one of the following categories:
- Qualified Veteran
- Active-Duty Service Member
- Selected Reserve or National Guard Member
- Surviving Spouse of a veteran who died in service or from a service-connected disability
VA Loan Service Requirements
The first step in qualifying for VA loan benefits and getting financing for a VA-backed home loan, is determining eligibility based on your service history and duty status. According to the VA, the proof of your eligibility is a valid VA Certificate of Eligibility (COE).
Pro Tip: The VA has expanded VA-backed home loan eligibility for surviving spouses. Check the chart below to see if you are eligible and what you need to apply for a VA loan.
|
Category |
Minimum Service Requirement |
Key Conditions / Notes |
|---|---|---|
|
Active-Duty Service Members |
90 consecutive days of active service |
Must be uninterrupted active-duty time. Meets minimum COE eligibility requirements. |
|
Veterans |
90 days to 24 months, depending on era and discharge |
Length of service varies by service era. Character of discharge matters. Must meet VA’s era-specific COE rules. |
|
National Guard & Reserve Members |
Either: 90 days of non-training active-duty service (after Aug. 2, 1990) OR 6 creditable years in the Guard or Selected Reserve |
Requirements differ by era and duty type. |
|
Surviving Spouses |
No minimum service requirement for the spouse |
Must be receiving Dependency and Indemnity Compensation (DIC) due to a deceased service member or be the spouse of an active-duty member who is MIA or a POW. |
VA Loan Service Requirements
In order to qualify for a VA loan, you’ll need to provide your lending institution with your Certificate of Eligibility. That requires that you provide documents to prove your service history.
|
Category |
Status |
Documents Required |
Where to Get It |
|---|---|---|---|
|
Active-Duty |
Currently serving |
Signed Statement of Service (full name, SSN, DOB, date entered duty, lost time, command name) |
Unit commander, personnel office, or administrative officer. |
|
Veteran |
Discharged |
DD214 |
milConnect; branch records office; National Archives (NPRC) for older records. |
|
National Guard |
Activated (current or former) |
DD214; if ≥90 days active duty (incl. 30 consecutive days): DD214 or annual point statement or DD Form 220 |
DD214: milConnect or NPRC. Point statement: state Guard personnel portal. DD220: unit personnel office. |
|
National Guard |
Current, never activated |
Signed Statement of Service (full name, SSN, DOB, date entered duty, creditable years, lost time, command name) |
Unit commander or state Guard personnel office. |
|
National Guard |
Discharged, never activated |
NGB Form 22 and NGB Form 23 |
State National Guard headquarters or state Guard personnel records office. |
|
Reserves |
Activated (current or former) |
DD214 |
milConnect; Reserve personnel office; NPRC for older records. |
|
Reserves |
Current, never activated |
Signed Statement of Service (full name, SSN, DOB, date entered duty, creditable years, lost time, command name) |
Reserve unit commander or personnel office. |
|
Reserves |
Discharged, never activated |
Latest annual retirement points statement and proof of honorable service |
Reserve component personnel office; online branch portals (Army HRC, Air Force Portal, Marine Online, NSIPS). |
|
Surviving Spouse |
Eligible for VA home loan benefits |
Veteran’s DD214; if receiving DIC: VA Form 26 1817 |
DD214: milConnect or NPRC. VA Form 26 1817: VA website. |
VA Loan Service Requirements
A Certificate of Eligibility (COE) (VA Form 26-1880) is an official VA document that verifies that a veteran, service member, or eligible surviving spouse qualifies for a VA-backed home loan. Eligibility is based on meeting military service requirements, and lets the lender know that you are eligible for this benefit. Your VA COE has information your lender needs to approve your VA-backed loan.
Entitlement Code: The basis for your eligibility for VA home loan benefits.
|
Entitlement Code |
Era |
Service Dates |
Minimum Service Requirement |
|
01 |
World War II |
1940 – 1947 |
90 continuous days |
|
02 |
Korean War |
1950 –1955 |
90 days |
|
03 |
Post-Korean War |
1955 – 1964 |
181 days |
|
04 |
Vietnam War |
1964 – 1975 |
90 days |
|
05 |
Entitlement Restored |
Varies |
Based on prior VA loan usage |
|
06 |
Un-remarried Surviving Spouse |
N/A |
Veterans must have met service requirements |
|
07 |
Spouse of POW/MIA |
N/A |
Veterans must have met service requirements |
|
08 |
Post–World War II |
1947 – 1950 |
181 days |
|
09 |
Post-Vietnam (1st period) |
1975 – 1980 |
181 days |
|
09 |
Post-Vietnam (2nd period) |
1980–1990 |
2 years or full period called; not less than 90 days (wartime) or 181 days (peacetime) |
|
10 |
Persian Gulf War |
1990 – present |
2 years or full period called; not less than 90 days |
|
11 |
Selected Reserves |
6 years in the Reserves or National Guard |
6 years honorable service |
VA Funding Fee: A payment required to secure your VA loan. The amount depends on loan type, if this is your first VA loan, and how much you are putting down. Funding fees range from 1.5% up to 3.3%. The fee applies to the loan amount, not the purchase price of your home. If you meet certain criteria, you are exempt from the funding fee.
Prior loans charged to entitlement: This section will show the number of entitlements currently in use from previous VA home loans.
VA Entitlement Amount: This shows you the portion of your VA home loan benefit currently available. Your basic entitlement is $36,000 for a VA-backed mortgage up to $208,187, with no loan limit for full entitlement.
Conditions of the COE: This section spells out any requirements or stipulations related to your eligibility. Conditions related to your funding fee or links to additional state-related Veterans benefits.
Three ways to get your COE:
Option 1: Online
You can request a COE online through the VA. You will need a verified account on VA.gov to request your COE online. You can check the status of your request on the VA.gov website.
Pro Tip: If the VA has all the information they need, you may be able to get a COE automatically.
Option 2: Through your lender
Ask your lender if they have access to Web LGY, an online system they can use to get your COE. If the VA has all they need, you can have your COE in minutes.
Option 3: By mail
You will need to fill out a Request for a Certificate of Eligibility (VA Form 26-1880) and send it in to your regional loan center (found on the last page of the VA form). Just know that mail requests take longer (up to 30 days) than requesting a COE online or through your lender.
VA Loan Credit Score Requirements
While the VA does not require a minimum credit score, most lenders use the benchmark of around 620 for VA loans. This number is taken from your FICO number (300 to 850), and the higher the number, the better your credit. However, some lenders may require higher credit scores, especially if you have certain risk factors like a high debt-to-income (DTI) ratio.
Not to worry! A low credit score doesn’t disqualify you for a VA loan, especially if you are planning to put down a large down payment, have a large nest egg, or a low DTI.
VA Loan DTI & Residual Income – Explained
Two risk factors that impact your VA loan application are debt-to-income (DTI) ratio and residual income. These factors are often overlooked by eligible VA loan applicants, which sometimes lead to loan rejections. Let’s take each of these factors and explain them, so you understand what your lender would like to see on your loan application.
Debt-to-Income Ratio (DTI)
DTI is your total debt payments— such as your mortgage, credit cards, and car loans — divided by your gross (before taxes) monthly income. Your DTI is one factor that determines if you can qualify for a VA loan. According to VA News, the common acceptable DTI ratio for a VA loan is 41%, the percentage of your income that goes towards debt. The purpose of DTI is to measure your ability to manage monthly payments and repay debt.
How you calculate your DTI:
- Take your annual income, say $60,000 and divide by 12 to get your monthly income of $5,000
- Now, multiply your monthly income by 0.41– $2,050
- If your monthly debt obligation is not more than $2,050, then your DTI should qualify you for a VA loan.
Don’t worry if your DTI is more than 41%. Lenders take other factors into consideration, such as the strength of your credit and financial profile, and your residual income.
Residual Income
Residual income is money you have left over each month after all of your major expenses are paid, such as housing, taxes and debt payments. The remaining money is usually set aside for household and family needs. Don’t confuse residual with DTI, which we said was gross income vs. monthly debt.
Residual income is important because the VA wants to be sure you have enough money left over to handle day-to-day expenses.
VA Residual Income Chart for Loan Amounts Above $80,000
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Family Size |
Northeast |
Midwest |
South |
West |
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Note: For families with more than five members, an additional $80 per person applies, up to a household of seven.
Property Requirements For A VA-Backed Home Loan
If you found your dream home, and wonder if it qualifies for a VA loan, a VA-certified inspector must verify that your home meets Minimum Property Requirements (MPRs) before the loan can close. Understanding MPRs will help you avoid making an offer on a home that won’t qualify for VA financing, avoiding delays, and unexpected repairs.
Check out Understanding VA Minimum Property Requirements to get a detailed list of VA MPRs.
VA Funding Fee
As we mentioned earlier, the VA funding fee is a one-time fee that is required to secure your VA loan. The fee depends on loan type, if this is your first VA loan, and how much you are putting down. Funding fees for VA direct loans range from 1.5% up to 3.3%. The fee applies to the loan amount, not the purchase price of your home. The is a percentage of the loan and varies based on your specific situation. For most first-time buyers putting zero down, the funding fee is 2.15% of the loan amount.
Some disabled veterans, surviving spouses, and Purple Heart recipients are exempt from the VA funding fee.
VA Funding Fee for Direct Home Loans
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If your down payment is… |
Your VA funding fee will be… |
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What If I Don’t Meet the Minimum Service Requirements for a VA Loan?
According to the VA, you may still be able to get a COE if you were discharged for one of these reasons:
- Hardship
- The convenience of the government (you must have served at least 20 months of a 2-year enlistment)
- Early out (you must have served 21 months of a 2-year enlistment)
- Involuntary reduction in force, or certain medical conditions
- A service-connected disability (a disability related to your military service)
Find a VA Loan
To find a VA loan, connect with a VA Mortgage Expert who will help you compare loan options and guide you through the rest of the process, from COE to closing.
Read the full article here