Owning a home is a big achievement. While there are multiple options to help you get a mortgage loan for your home, the VA loan program can prove to be the best one. This loan program makes it easy for eligible service members, veterans, and their families to get a home.
The biggest benefit of this VA loan is its favorable terms and conditions for veterans and their families. Current VA interest rates remain competitive, offering veterans opportunities for affordable home financing. However, you will first need to understand the eligibility criteria before applying for this loan. In this article, we will outline the top 5 requirements to become eligible for a VA home loan.
Keep reading to find out.
- Service Eligibility
The primary criterion for VA home loan eligibility is meeting specific service requirements. Generally, individuals who have served in the military, including active-duty service members, veterans, National Guard members, and reservists, are eligible for a VA loan.
Just being a part of these veteran departments isn’t enough. The duration and nature of service are also important in determining eligibility. Active-duty service members qualify after serving for a minimum continuous period, while veterans might need to meet specific service length and discharge requirements.
The same is the case for National Guard members and reservists. They must meet specific criteria regarding active duty, training periods, and discharge status.
- Certificate of Eligibility (COE)
After you meet the requirements mentioned above, you will need to obtain a Certificate of Eligibility (COE) to prove your eligibility for a VA home loan. The certificate of eligibility is an official document that confirms the applicant’s military service history and verifies their eligibility status.
The COE can be acquired through various means, such as directly through the VA, through a lender, or online using the VA’s eBenefits portal. It’s important to provide correct and comprehensive information to obtain the COE efficiently. This document will further help you file for the loan and complete the application process.
- Credit Score and Financial Standing
Before approaching this requirement, you must know that there are no minimum credit score requirements from the Department of Veterans Affairs itself. However, lenders often outline and impose their own standards.
In this scenario, having a reasonably good credit score is important to secure approval for a VA home loan. Lenders evaluate credit history, income stability, debt-to-income ratio, and overall financial standing to assess the borrower’s ability to repay the loan.
Just remember that while the VA loan program has nothing to do with credit score, you will still need to show financial responsibility to improve the chances of loan approval.
- Property Eligibility
Not only the borrowers but the property intended for purchase with a VA home loan must also meet specific requirements set by the Department of Veterans Affairs. VA will confirm that the property must be the borrower’s primary residence and meet safety, habitability, and VA appraisal standards.
However, there are no strict requirements for the type of property. The VA loan can be used for various property types, including single-family homes, condominiums, townhouses, and multi-unit properties up to four units.
All you need to know is that properties used primarily for investment purposes don’t qualify for VA home loans. Also, any commercial property and property aimed for business purposes.
- Entitlement and Loan Limits
As a loan applicant, you must understand your VA loan entitlement. This entitlement will determine the maximum loan amount the VA will guarantee. This entitlement, calculated based on service history and specific criteria, influences the loan limits set by the VA.
Additionally, understanding the VA’s loan limits in different regions is important because these limits vary based on the area’s median home prices.
