VA Loan Requirements and Eligibility

VA Loan Requirements and Eligibility

VA home loans have specific loan requirements as well as eligibility requirements that veterans, and qualifying family members, must meet. These requirements include military service, a Certificate of Eligibility (COE), and sufficient income.

VA loan eligibility requirements

Eligibility requirements for a VA loan vary depending on whether you’re an active service member,  a veteran, a member of the national guard, a member of the reserves, or a spouse or former spouse of a service member. All members must meet minimum service requirements and be able to obtain a COE.

A COE may be obtained if a service member has been honorably discharged and meets a minimum of two service requirements. These requirements fall under qualifying wartime and peacetime periods, the dates of active duty, and minimum service. The VA offers a detailed list of all periods, dates, and service requirements.

If you are not able to meet the minimum service requirements, you may still be able to get a CEO if you were discharged under certain circumstances like hardship, a service-connect disability, or certain medical conditions. Make sure to double check your eligibility for VA benefits with the veterans department.

U.S. citizens who meet the following criteria may also be eligible for a COE:

• A member of the armed forces of a U.S. ally during World War II
• Public health service officers
• U.S. Military cadets
• Midshipmen of the U.S. Naval Academy
• National Oceanic and Atmospheric Administration officers
• Merchant seaman who served in World War II

Spouses of veterans may apply for a VA home loan if they meet specific requirements. If a spouse's partner is missing, a prisoner of war, or if remarriage has not occurred after a service-induced disability or death, they may qualify for a VA loan.

The VA ultimately determines eligibility. The COE verifies the duration and character of service that qualifies the borrower for the VA loan. It also factors into the calculation of their Funding Fee.

VA loan qualification requirements

In addition to eligibility requirements, VA loans also have income and home requirements including a maximum debt-to-income ratio (DTI) of 41%. Additional qualifications include:

• Credit score: The credit score requirement for VA loans depends on the lender and your financial profile. The VA has no minimum credit score requirement, but your lender may require your credit score to be at least in the 500s.
• Income requirements: While there is no minimum income requirement for a VA loan, lenders typically want to see a DTI of no more than 41%. DTI is the ratio of how much you owe in debt v how much income you make. They will also want to see consistent and reliable income.
• Payment of a Funding Fee: This fee can vary depending on the amount of the down payment and military category.
• Borrowers are usually required to move into their new home no more than 60 days after it is purchased. Some exceptions can be made in certain circumstances.
• VA loans must be used for a primary residence. They cannot be used for investment homes or second homes.
• VA appraisal: The VA has its own specific property requirements so the home must pass a VA approved appraisal.