A VA loan is a special form of mortgage designed to make it easier for current and former service members to buy houses. VA loans don’t come directly from the federal government; lenders work together with the Veterans’ Administration to offer favorable terms to veterans. Qualifying for a VA loan is not too complicated; here are the basic requirements.
The Core Criterion for VA Loan Eligibility: Service
In order to qualify for a VA loan, you must have been a member of the armed forces. Serving on active duty will qualify you as long as you complete 91 days of service in wartime or 181 days in peacetime. National Guard members and reservists qualify after 6 years of service. (Reservists or NG members called to active duty can qualify based on the days of service figures above.) If you have a spouse who died in the line of duty (or from a service disability), you may also qualify.
Intended Use of VA Loans
VA loans are intended to help you secure a permanent home for yourself or your family. To that end, they can only be used for the purchase of (or the construction of) a home you intend to live in. You cannot use a VA loan to finance the purchase of a property you intend to rent out.
The VA takes a very generous view of your income and debt, but it does have certain minimum standards. It will not authorize a VA loan if your ratio of debt to income (DTI) is at least 41 percent. Your lender can help you through the DTI-checking process. Lenders generally impose minimum credit scores on VA loans, but they are more generous with veterans than with other borrowers.
Before your VA loan application is complete, you’ll need to receive a Certificate of Eligibility or COE. This is easy to obtain either via a mail-in form or an online application process, and this is another aspect of qualifying that your lender can help you with. Once you have received a COE, it can be filed online through the Web LGY system. This allows any authorized VA lender to access it instantly.
VA loans were originally intended for purchasing single family homes. Other types of housing (e.g. condominiums, townhomes, modular or manufactured homes) may also be eligible for VA financing, but you’ll have to double-check this with your lender before proceeding. Speaking generally, multi-unit complexes have to qualify for VA financing in their entirety for you to use a VA loan to purchase one of the units.
While the eligibility criteria for VA loans are fairly straightforward, as with any federal benefit it pays to get your application whipped into shape well in advance. As long as you confirm that you meet all of the criteria described here, you should have no difficulty securing the loan you need.
Ask questions to your VA Loan Specialist