VA Loan Basic Eligibility
Veterans, National Guard members, active on-duty military personnel and reservists are the primary beneficiaries of the VA Loan program. Select surviving spouses of service members who sustained disability connected to service or of those who died while performing active duty may also be eligible. In order for them to take out a VA loan, the Department of Veterans Affairs (VA) had set forth basic service requirements.
The VA is the ultimate decision maker whether or not a potential borrower is qualified to take out a home loan through the VA Loan program. However, it will be good for mortgagors to learn the basics of eligibility guidelines that were set by the VA. Here’s a quick review.
A borrower may be eligible for VA Loan if at least one of the listed conditions listed below is met:
- The borrower had served 90 consecutive days of active service during wartime, OR
- The borrower had served 181 days of active service during peacetime, OR
- The borrower had more than 6 years of service in the National Guard or Reserves, OR
- The borrower is the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
VA Loan Certificate of Eligibility (COE)
A VA Loan Certificate of Eligibility (COE) is another basic and very important requirement. Borrowers should have this certificate handy in order to begin the home loan application process. The COE verifies the length and character of service of an applicant to qualify for the program.
There are three ways potential borrowers can secure the VA Loan Certificate of Eligibility. These are through:
- VA approved and accredited lenders;
- VA’s eBenefits online portal
- VA Form 26-1880, available by mail
The process only takes a few minutes to complete as long as the proof of military service is ready and available on the day of application. This ensures that home financing will move forward with no delays. Borrowers may choose to have a VA Loan Specialist process and obtain COEs on their behalf, or work it out themselves.
VA Loan Income Requirements
The VA Loan program does not require any income thresholds or minimums. However, interested home-buyers should have a stable and reliable income that will allow them to pay their usual monthly expenses plus the mortgage payment. In addition, borrowers are also required by the VA to set aside a particular amount from their monthly income after paying every major expense.
This excess amount will be used for paying typical household needs, including, but not limited to, food, transportation, and medicines. This is called residual income – a huge factor that allows the VA Loan program to maintain a low foreclosure rate. By implementing this requirement, the VA does not only help increase the borrower’s ability to meet its entire financial obligation, it also ensures that veterans have a means of self–help in cases of emergencies.
While the VA sets the guidelines and eligibility requirements of the VA Home Loan program, banks and other lenders that do the financing have some additional requirements for potential borrowers to satisfy. These include certain income levels, credit requirements, and debt obligations. A mortgage specialist can help check your credit score and examine your debt-to-income ratio. Lastly, a veteran shouldn’t have been dishonorably discharged under any condition.