VA Loan Requirements and Eligibility: Everything You Need to Know
When you’ve raised your right hand to defend your country, you’ve earned the privilege of some unique benefits, including the Veterans Assistance (VA) loan. But before you head out to find a mortgage lender, you need to take the time to make sure you meet all of the VA loan eligibility requirements. Your DD-214 might get you some of your veteran benefits, but there are specific VA loan qualifications that not every active or past service member meets.
VA loan requirements
Once you’ve determined VA loan eligibility, you need to gather the necessary paperwork and requirements to apply for your loan. To get started, you will need to acquire a certificate of eligibility (COE) or a statement of service.
This paperwork can be used to show any private mortgage lender that you meet the program’s eligibility criteria. For veterans, your DD-214 may show the same information, but you need to get a COE to satisfy the VA loan requirements. You can get this through the eBenefit web portal, by mail or through the VA’s Web LGY service. Your lender can walk you through the process.
Active service members won’t have a DD-214, so you won’t be able to get a COE. Instead, you need to get a statement of service signed by your commander, personnel officer or readiness NCO. Here is a sample that you can use to format your statement. Different steps are in place to help surviving spouses get a COE.
VA loan eligibility
Most people know that the VA loan is only available to past service members and active military personnel, but it’s not quite that simple. The U.S. Department of Veterans Affairs has some specific VA home loan requirements that must be met before you can take advantage of your no-down payment and no-private mortgage insurance loan.
In general, active-duty military will have access to the VA loan after 90 days of continuous service. Veteran VA home loan eligibility will depend on when you served and the length and level of your service commitment. For National Guard and Reserves, you must have served at least 90 days of continuous active duty service (not counting time in TRADOC, must be Title 10). Additionally, you will become eligible after finishing six years of service.
If you have been discharged from the military before meeting the service requirements, you may still be eligible, based on the nature of your discharge. People in this category should consult the VA, as the eligibility status will be on a case by case basis.
How to apply for a VA loan
The process for getting a VA loan is quite similar to getting any other type of loan with a few exceptions. Most VA loans come through private lenders set up to participate in the VA loan program.
1. Get your COE or statement of service. You will need to acquire this documentation to show that you are eligible for a VA loan. A lender may be able to help you through the process if you are unable to complete it on your own.
2. Begin researching potential mortgage lenders. As the VA loan is acquired mainly through private lenders, you can shop for options as you would for a traditional loan.
3. Complete the prequalification process. Most lenders have an option to find out what rates and amounts you are eligible for without any hits to your credit.
4. Select a lender. Once you’ve found a lender that you want to work with, complete your full application. After you are approved, you are well on your way to buying or building your home!
VA loan qualifications
The VA loan qualifications for what you can and can’t use your loan for are fairly straightforward. As long as you are purchasing a home that you will be living in or are building a home that you will be living in, you should meet the qualifications. Multi-family homes are available, as long as the qualifying person is planning on living in one of the units.
In the past, there were maximum caps on the price of a home you could use a VA loan for. However, thanks to the passing of H.R. 299 in 2019, the caps were removed starting in 2020. Your lender will still impose its own caps based on your financial situation, but this does pave the way for some borrowers to get larger loans.
VA loans cannot be used to purchase investment properties. As stated, you must be planning on living in the home. You may use your VA loan privileges more than once, but you will incur a larger VA funding fee the second time around.
Other uses for a VA loan
While the uses of a VA loan are quite straightforward, there are some variations from a traditional home that you can use the loan for. First, a VA loan can be used to purchase a condo. You do not have to buy a house. Second, you can refinance your current mortgage with a VA loan. This does include cash-out refinancing and interest rate reduction refinancing.
VA loans can also be used to build a new home, buy a manufactured home or add new features to make your home more energy-efficient (like solar).