Qualifying For a Veterans Administration (VA) Mortgage Loan
What is a Veterans Administration loan?
Veterans Administration (VA) home loans are guaranteed by the VA and can be used to purchase a home or refinance an existing mortgage. VA home loans are available for active, non-active, Reserve, National Guard, and retired members of all branches of the United States military. Literally millions of veterans and service personnel are eligible for VA financing.
Does the VA provide the money for the loan?
The Veterans Administration does not actually provide loan funds. The mortgage is provided by a traditional lender, and the VA insures a percentage of the loan by giving the lender a guaranty that their investment will not be completely lost if the borrower defaults. That’s why a VA loan is called a “government-guaranteed” loan. However, keep in mind that this guaranty is not a promise that the veteran will qualify for a VA loan.
Primary Benefits of a VA Home Loan
- 100% financing, no down payment required
- perfect credit not required
- no monthly mortgage insurance (MI) required
- available for purchase or refinance
- limitation on veteran’s closing costs; seller can pay up to 4% of the closing costs
- Seller can pay down veteran’s debt to help reduce debt-to-income ratio
- VA loan are assumable, subject to VA approval of the assumer’s credit
- 30 year fixed loan with interest rates similar to FHA
Three pieces of documentation are required to determine eligibility
- DD214 for discharged veterans
- statement of service for active military personnel
- certificate of eligibility (COE)
Your Mortgage Professional can help you acquire a COE and determine additional qualifying criteria, such as minimum credit scores, debt-to-income (DTI) ratios, and your county’s maximum loan amount.
Who is eligible for a VA home loan?
Eligible veterans must have at least 90 days of active duty service during the periods shown below, and must have been honorably discharged.
- World War II (September 16, 1940 to July 25, 1947)
- Korean conflict (June 27, 1950 to January 31, 1955)
- Vietnam era (August 5, 1964 to May 7, 1975)
Veterans who have served during peacetime and active duty military personnel must have more than 180 days of active service to be eligible. Enlisted veterans whose service commenced after September 7, 1980, and officers whose service commenced after October 16, 1981, must in most cases have served at least 2 years.
Frequently Asked Questions:
Q: Are a veteran’s spouse or children eligible for a VA loan?
The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit, but children are not eligible.
Q: How can I obtain proof of military service?
Standard Form 180, “Request Pertaining to Military Records,” must be completed and mailed to the appropriate custodian of military service records.
Q: Can I get a VA loan with reduced entitlement?
We want to remind our military borrowers that it may be possible to use VA financing to purchase or refinance with remaining or restored loan entitlement.