What are the current VA home loan requirements?
If you’re an active service member, veteran or surviving spouse, VA loans can offer an array of home financing advantages that can help you get a foothold in the housing market. Zero requirements for down payments and comparatively lower credit thresholds make these mortgages a popular option for those who qualify.
However, not everyone who served is automatically eligible. In order to qualify for a VA loan, you’ll need to meet a few requirements.
What are VA mortgage requirements?
VA mortgages are designed to help military members become homeowners at a lower cost than a conventional loan, such as a 30-year fixed mortgage. However, they do come with specific thresholds and fees that applicants will need to cover. Along with your specific service history, you’ll have to meet certain conditions related to your finances and homeownership goals.
Here’s a breakdown of the most important VA loan eligibility requirements:
- Service requirements
- VA funding fee
- Occupancy intention
- Certificate of eligibility
VA Loan service requirements (one or more)
- Active duty members must have served 90 consecutive days, or
- You have served 181 days of active service during peacetime, or
- You have 6 years of service in the National Guard or Reserves.
For some cases, such as discharge or service-related injury, you might be exempt from certain length-of-service requirements. These exceptions can vary from case to case, so be sure to check with the VA for your specific length of service requirement.
A bad conduct or dishonorable discharge in the past could also prevent you from securing this type of loan. Depending on the circumstances of your specific case, your discharge status could be appealed and upgraded. Again, be sure to check with the VA for your official discharge status and whether it can be appealed.
If you’re a surviving spouse of a military member who was killed, injured or captured in the line of duty, you may also be eligible. To secure a VA loan as a surviving spouse, you’ll need to meet a few additional requirements:
- You have not remarried.
- Your spouse was killed in service or from a service-related disability.
- Your spouse was missing in action or a prisoner of war for at least 90 days.
- Your spouse was rated disabled and was eligible for disability compensation at the time of death.
There is always a possibility for exceptions to these requirements based on your exact circumstances and service history. If you have additional questions about your specific VA loan eligibility, be sure to contact the Department of Veterans Affairs.
VA funding fee
While VA loans won’t require a down payment, there is still an upfront expense buyers will need to settle. VA funding fees are a payment made to the U.S. Department of Veterans Affairs, and help supplement the cost of VA mortgages overall.
Since the U.S. government is responsible for backing these loans, the cost is carried by U.S. taxpayers. By requiring a VA funding fee in the first stages of the mortgage process, the Department of Veterans Affairs can ease the financial burden on the public and help fund the VA loan program.
In 2021, a zero-down-payment VA loan for first-time applicants would require a funding fee of 2.3% of the home’s appraised value, according to VA.gov. On a $200,000 home, the borrower has to pay $4,600 to satisfy the expense. Considering a down payment option on a typical mortgage would require at least 20%, or $40,000, eligible VA loan applicants will still save on initial expenses, despite the VA funding fee.
This fee can either be settled as a one-time payment at closing, or folded into your monthly mortgage bill to be paid off over time.
If you’re in the market for a vacation home or are looking to make a little extra with an investment property, you won’t be eligible for a VA loan.
In order to secure this type of financing, you’ll need to confirm that you intend to personally occupy the home as your primary residence. Lenders will typically give applicants 60 days to move in to the property after the loan closes.
For service members who are on active duty, two months might not be enough time to schedule a move. The VA does allow some exceptions for applicants in these circumstances, but will likely still require the buyer to move in within a year.
This move-in timeline can also be extended for retiring service members, or if the property is in need of essential repairs or improvements.
No matter how far the required move-in date is extended, the residence will need to be occupied by the VA loan applicant as their primary home.
Certificate of eligibility
Before applying for a VA home loan, some buyers will obtain a Certificate of Eligibility, or COE, to ensure that they qualify for this type of financing. Obtaining a COE allows you to demonstrate your history of military service to a lender and can be obtained by veterans, active members of the military or national guard and families of service members.
Having a COE on hand is not necessary to apply for a VA loan, as lenders are able to verify your COE status through the VA’s automated system. However, lenders use this verification process to get documented proof of the applicant’s service history and whether they are entitled to VA financing.
Proof of service requirements can vary depending on your service history and current status. They can include discharge or separation papers, history of retirement benefits or signed statements of service.
If you aren’t able to meet the minimum service requirements, but left military service due to reduction in forces, a medical condition, or other external forces, you may still be able to obtain a certificate of eligibility. Be sure to check with your lender about their specific COE requirements.
What if I don’t meet VA home loan requirements
If you’re uncertain of your own VA eligibility, you can still begin the application process through loan preapproval. As an important step in any mortgage process, preapproval identifies any gaps in the applicant’s ability to qualify for or sustain payments of a loan.
If you aren’t able to get preapproved due to service requirement minimums, you may still be able to obtain a COE. Applicants who were discharged for hardship, early out, reduction in force or certain medical conditions might still be eligible.
Be sure to check with VA.gov for the most current VA mortgage requirements and whether you qualify for this type of loan. If you’ve obtained a certificate of eligibility and want to get started on your mortgage application, you can do so today.
*Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.
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