The VA Home Loan Guaranty program has been making it easier for veterans and active-duty military members to buy a home for more than 70 years. Part of the original G.I. Bill following World War II, VA loans offer great perks. They’re not just available to anyone in the service, though. There are certain eligibility standards and other requirements you must meet to be able to take advantage of the program.
There are certain eligibility standards and other requirements you must meet to be able to take advantage of the program. Find out everything you need to know about VA loan eligibility and requirements.
Why choose a VA loan?
VA loans are issued by a private lender and insured by the Department of Veteran Affairs. Because of this insurance, there’s not as much risk involved for the lender as there is with conventional mortgages.
As such, you can get a lower interest rate on a VA loan. Plus, there’s no down payment required. If that’s not enough, you also don’t have to pay private mortgage insurance, which can cost between 0.5% and 1% of your loan amount every year.
There is, however, a funding fee you have to pay upfront. Between 1.5% and 3.3% of the loan amount, you’ll still need some cash to get the loan.
“So, technically speaking, VA Loans do not require a down payment,” says Rhett Struve, realtor and owner of Twin Cities Sold. “But there is a small percentage fee that accompanies this loan type.”
Despite the fee, you’ll want to see if you qualify.
VA Loan Eligibility and Requirements
For starters, you’ll want to make sure that you can even apply for a Certificate of Eligibility.
Here’s how the VA’s eligibility breaks down:
- You are an active-duty member of the military.
- You were separated from the military in a situation other than a dishonorable discharge.
- You are a reservist or National Guard member.
- You are a surviving spouse of a deceased veteran.
If you are a veteran or active-duty service member, there are also service requirements you need to meet:
- Active-duty members and veterans must have at least six months of service to apply; the waiting period is only three months during wartime.
- Selected Reserve and National Guard members must have at least six years of service.
Once you’ve established that you are eligible to get a Certificate of Eligibility, you’ll also need to make sure you and your new home qualify for the actual loan.
VA loan eligibility and requirements for homes
Once you’ve established that you are eligible to get a VA loan, you’ll also need to make sure your new home qualifies. The only restriction the VA has is that your home needs to be your primary residence.
VA loan credit score requirements
Although the VA doesn’t require a minimum credit score to apply, the lenders you work with might have minimums of their own. In general, you’ll want to have at least a 620 credit score to qualify for a mortgage loan.
VA loan Certificate of Eligibility
The next step is to get a Certificate of Eligibility (COE), which verifies to the lender that your loan will be backed by the VA.
To get your COE, you have a few options:
- Online: Log into your eBenefits account to fill out the application online.
- Lender: VA-approved lenders have access to the application. If you’re already working with one, ask a loan officer to help get you started.
- Mail: If you prefer snail mail, you can use Form 26-1880 if you’re the military member or Form 26-1817 if you’re a surviving spouse of a deceased veteran.
Once you’ve filled out the application, you’ll need to provide verified evidence of the following:
- A statement of your military service.
- The reason for your separation from the military, along with your discharge paperwork.
- Your status as a surviving spouse.
Once you have all of this information, the Department of Veterans Affairs will consider your application. If approved, you can share the COE with your preferred lender to verify that the loan will be insured by the VA.
Is a VA loan right for you?
VA loans aren’t nearly as easy to get as a conventional mortgage. It requires more effort on your part to prove your eligibility and make sure you meet all the requirements from the beginning.
That said, the work can pay off. With typically lower interest rates and no down payment or mortgage insurance, you could save yourself hundreds of dollars a year.
“One of the primary reasons for why a veteran would decide to use a conventional mortgage over a VA loan is if they are capable of accumulating the necessary funds for a down payment,” says Struve. “This would help them avoid the initial fees that accompany a VA loan.”
Also, you can write off a VA loan without further discussion if the house you’re moving into won’t be your primary residence.
If you do qualify, get started by checking out SuperMoney’s top mortgage lenders. You’ll be able to compare rates and fees and get some more information based on your individual needs.
Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.