VA mortgage loans are funds that help service members, veterans, and surviving spouses become homeowners. These programs often have low-interest rates and rarely require a down payment. VA loans enable participants to buy, build, repair, retain, or adapt homes for personal use.
You can acquire these loans from private lenders, like banks and mortgage lenders. In this article, we’ll explain all the requirements to apply for a VA mortgage loan so you can find out if you’re eligible for these opportunities. We’ll also go through different types of VA loans and housing programs so you can choose the best option for your situation.
How Does a VA Mortgage Loan Work?
In VA loan programs, the U.S. Department of Veteran Affairs guarantees a portion of the loan, enabling the lender to provide more favorable terms for the borrower. Here are the typical benefits of VA home loans:
- The VA doesn’t require a down payment.
- VA loans have competitively low-interest rates.
- VA loan programs have limited closing costs.
- Participants don’t need private mortgage insurance.
- Participants can use VA loan guarantees multiple times.
What Are the Eligibility Requirements to Apply for a VA Mortgage Loan?
Eligibility requirements for VA direct or VA-backed mortgage loans involve your length of service, duty status, and nature of service. You or your spouse need to have a valid Certificate of Eligibility (COE) to prove you fulfill these requirements. You also need to meet the mortgage lender’s credit, income, and debt-to-income loan requirements. These vary by lender, but it’s often a requirement to have a credit score of at least 620.
Unless you received a dishonorable discharge, you can be eligible for a VA home loan if you meet one or more of the following service requirements:
- You served active duty for at least 90 total days during a period of war.
- You served active duty for at least 181 consecutive days during a period of peace.
- You served at least six years of duty in the National Guard or Reserves.
- You are the spouse of a service member who died in the line of duty or as a result of a service-related disability.
What If You Don’t Meet the Service Requirements?
If you don’t meet the basic service requirements, you could still be eligible for a VA loan if you were discharged for one of the following reasons:
- You were discharged for a service-connected disability or medical condition.
- You were discharged for a hardship or a reduction in force.
- You served at least 20 months of a 2-year enlistment and were discharged at the convenience of the government.
- You served at least 21 months of a 2-year enlistment and were discharged for an early out.
If you received a less-than-honorable discharge, dishonorable discharge, or a discharge for bad conduct, you may be ineligible for VA benefits. You can still try to qualify for benefits by applying for a discharge upgrade. If your situation was complex, you may try to qualify by participating in the Character of Discharge review process. In this process, the VA reviews your record to establish if your service was “honorable for VA purposes.”
How Can You Get Your COE?
The process of getting your COE is typically easy. Usually, your lender can find your COE with your social security number and date of birth. Keep in mind that you don’t need your COE before applying for a VA loan. You can get your COE by applying for a VA loan in the following ways:
- Apply for a VA loan through a VA-approved lender.
- Apply for a VA loan online through the VA’s eBenefits portal.
- Apply for a VA loan by mail with VA Form 26-1880.
What Are the Different VA Loan Programs Available?
Here are some different types of VA loans and financial programs available for eligible service members, veterans, and spouses:
- Purchase loans. These loans help veterans, service members, or the spouses or dependents of active duty service members purchase a residence at a competitive interest rate without needing to pay a down payment or have private mortgage insurance. To be eligible, you need satisfactory credit, a sufficient income to make monthly payments, and a valid COE.
- Cash-out refinance loans. These loans allow you to get cash from your home equity and use it to pay off debt, pay for education, or make home renovations. Just like purchase loans, eligibility depends on credit, income, and a valid COE.
- Interest rate reduction refinance loans (IRRRLs). Also called streamline refinance loans, IRRRLs help you get a lower interest rate and reduce the monthly payment for your current VA loan by refinancing it. To be eligible, you must have an existing VA-guaranteed loan on the property.
- Native American direct loan (NADL) program. The NADL program helps Native American veterans decrease the interest rate on a VA loan or finance the purchase, construction, or renovation of a home on Federal Trust Land. To be eligible, your tribal organization must participate in the VA direct loan program, and you need a valid COE.
- Adapted housing grants. Specially Adapted Housing Grants help veterans with permanent disabilities related to their military service. They help participants purchase or build adapted homes or modify homes to accommodate their disabilities.
- Foreclosure avoidance assistance. The VA offers financial counseling to help veterans and service members prevent foreclosure during times of financial difficulty.
- State resources. Various states offer special resources like property tax reductions to veterans and service members.
What If You’re the Spouse of a Veteran?
To get a VA loan as the surviving spouse of a veteran, you need a COE to show your lender you’re qualified for these benefits. Requirements involve the status of the veteran and whether the spouse has remarried. You may qualify if one of the following situations applies to you:
- You’re the spouse of a veteran who’s missing in action.
- You’re the spouse of a veteran who’s a prisoner of war.
- You’re the spouse of a veteran who died in the line of duty or as a result of a service-related disability.
- You’re the spouse of a veteran who had a service-related disability and died from a different cause.
In addition, for surviving spouses to qualify, it’s necessary that they’ve not remarried or have only remarried after age 57 or December 16, 2003. If you’re receiving Dependency and Indemnity Compensation (DIC), you can apply for a COE by filling out VA Form 26-1817. If you’re not receiving DIC benefits, you can apply for a COE by filling out VA Form 21P-534EZ. You’ll also need a copy of your marriage license and the veteran’s death certificate. In either case, you’ll need to show the veteran’s DD214 or other separation papers.
Can You Get Your COE in Any Other Situations?
Other people who have supported the U.S. military may also qualify for COEs and VA loans. For example, if you’re a U.S. citizen who served in the armed forces of a government allied with the United States during WWII, you may qualify for a COE. You could also qualify if you served in a role at a supporting organization. You may be able to get your COE if any of the following situations apply to you:
- You served as a Public Health Service officer.
- You served as a Cadet at the U.S. Military, Air Force, or Coast Guard Academy.
- You served as a Midshipman at the U.S. Naval Academy.
- You served as an Officer of the National Oceanic and Atmospheric Administration.
- You served as a Merchant Seaman during WWII.
Can You Use a COE You Have Already?
In some situations, you may be able to use a COE you’ve already earned or “restore” your entitlement to get another VA direct or VA-backed loan. You can request an entitlement restoration by filling out VA Form 26-188 and sending it to the VA regional loan center in your state. To qualify for this opportunity, you must meet at least one of the following specifications:
- You have sold the property you purchased with the original loan and have paid that loan in full.
- A qualified veteran transferee has agreed to assume your loan and substitute their entitlement for the same amount of entitlement you used initially.
- You have repaid your original loan in full but haven’t sold the property you bought with that loan and you haven’t restored your entitlement before.
If you’re a veteran, service member, or military spouse, VA mortgage loans can help you own a home, meet financial obligations, and invest your money responsibly. If you’re uncertain about your eligibility status or have questions about the loan programs available to you, it’s a good idea to contact your mortgage company or your regional VA loan center. By working with a professional, you can determine if you meet service, credit, and income requirements and choose the best plan for your goals.
What are the requirements to apply for a VA mortgage loan? | Rock Mortgage — Houston, Texas