In the US, there are many types of mortgage loans which have been created specifically to help and fulfill the needs of citizens from different walks of life. Among these loans come the Veterans Affairs (VA) home loans which had officially been introduced under the Serviceman’s Readjustment Act towards the end of World War II. Once a person finds out about this type of loan, they often want to find out their personal VA loan eligibility status.
This home loan program was specifically designed for people serving in the US military and since its inception has helped more than 20 million veterans and active-duty service members achieve their dream of home ownership. This VA loan entitlement allows lenders to extend financing to eligible veterans on exceptional terms and rates, such as 0% down payment and low monthly rates, etc.
So, do you want to check your VA loan eligibility? Well, in order to determine eligibility, certain service and entitlement requirements have to be met as well as a few property and credit and income requirements. Today, we will be discussing all these important factors which contribute towards your VA loan eligibility.
Service Requirements For VA Loan Eligibility
Basically, the service requirements fall under two categories, which are: peacetime and wartime. According to the VA home loan laws, potential buyers must satisfy only one of the service requirements. So, what are these service requirements? Well, in order to apply for a VA loan, the veteran must have served 181 consecutive days of service during peacetime or 90 consecutive days during wartime. National Guard members and reservists have to complete at least 6 years of service. Spouses of military members are also check into their VA loan eligibility status but have to meet certain income and credit criteria.
Certificate of Eligibility (COE)
Applicants who meet the basic service requirements mentioned above must first obtain a Certificate of Eligibility in order to apply for a VA loan. Please note it isn’t necessary to get your COE to start with the VA loan process, but it is better to determine whether or not you are eligible in the first place. So, what is the purpose of the COE? Well, as the name implies, this certificate is your evidence that you are eligible to receive VA home loan benefits and is a crucial step in determining your VA loan eligibility.
So, how can one obtain a COE? Well, you can obtain this certificate through the Department of Veterans Affairs online at the VA e-benefits portal, or by mailing form 26-1880 and 26-1817 to the VA department. However, according to the Department of Veterans Affairs, veterans are encouraged to ask their VA-approved lender to determine eligibility, as they have direct access to the Web LGY, an internet based application that allows approved lenders to verify your eligibility within seconds.
VA Loan Eligibility Property Requirements
VA home loan benefits are only offered for owner-occupied properties. But of course, VA home loans apply for any and all shapes and sizes of homes, from single-family homes to townhomes and condominiums. Single-family homes are the standard when it comes to applying for a VA loan. However, many other types of housing can also win VA approval, including modular homes, new construction homes, townhomes, and condominiums. Please note not every townhome and condo is eligible, as for these properties to be eligible, the entire complex has to meet certain VA loan eligibility requirements.
Credit and Income Requirements
Credit and income is one of the most important factors in regards to VA loan eligibility. According to the VA Home Loan laws, in order to qualify for a loan, the veteran must have a steady and ample income and satisfactory credit. Please note the Department of Veterans Affairs does not directly impose any credit score restrictions, but most VA-approved lenders will look for applicants who have a credit score over 620.
For the income, since the VA department works to protect potential buyers, the debt-to-income ratio is calculated to ensure the buyer can afford the mortgage they are applying for. According to the laws of the Veterans Affairs, veterans should have a debt-to-income ratio of 41%. But nevertheless, since it is a VA home loan, potential buyers are given flexibility in terms of the DTI ratio as well. If your application is accepted even after you DTI ratio is higher than the acceptable limit, the mortgage underwriter has to justify the reasons for the approval.
VA home loan benefits are for both repeat and first-time homebuyers. This means even if you have obtained a VA loan in the past, you can still be eligible for another loan. In addition, it is also possible for qualified veterans to have more than one VA loan at the same time, but it all depends on your credit and income and amount of entitlement. If you have a ‘Full Entitlement’, you can be eligible for a home loan of $420,000 or more. However, please note the loan amounts can vary based on each borrower’s ability to repay and the amount of entitlement.
So, now that you are familiar with the factors mentioned above, determining your VA loan eligibility for a won’t be a problem.