Am I Eligible for A VA Loan?

Veterans, active duty service members, persons of the National Guard, Reservists, and spouses of those who died in the line of duty can apply for a Veterans Affairs (VA) loan. However, not all who fall into these categories will be approved. To obtain a VA loan, applicants must meet specific basic requirements, as outlined by the Department of Veterans Affairs.

Eligibility Criteria for VA Loans

An individual may be eligible for a VA loan if they were not dishonorably discharged and meet at least one of the following criteria:

  • IFThey served a minimum of 90 consecutive days in active service at a time of war
  • ORThey served a minimum of 181 days of active service during a time of peace
  • ORThey served a minimum of six years in the National Guard or Reserves
  • ORThey are the spouse of a service member who either died in the line of duty or later on as a direct result of an injury incurred during their service

If someone fails to meet the above criteria, chances are they will be denied a VA loan. However, there are some exceptions. If you do not meet the items above but believe you should be given a VA loan, you should speak to one of our loan specialists to see if there is a way you can qualify.

Getting the Certificate of Eligibility

The first step in applying for a VA loan is completing the VA Loan Certificate of Eligibility, or COE. This form is designed to verify that the applicant’s service or that of the spouse meets the guidelines set out by the Department of Veterans Affairs. There are three ways to apply for the COE:

• Work with a lender approved by the Department of Veterans Affairs

• Submit an online application through the Department of Veterans Affairs eBenefits portal

• Print out the VA Form 26-1880 and mail it in

Out of these methods, working with an approved lender tends to get the best results as they have the experience needed to navigate the system properly.

Understanding VA Loan Income Requirements

The Department of Veterans Affairs does not have a minimum income requirement for VA loan borrowers. With that said, income is a requirement. To have their loan application approved, the person filing must be able to demonstrate stable, reliable income that is sufficient to cover their monthly expenses—which will be calculated to include the mortgage payment that will result from property obtained with the VA loan. The borrower must make enough to cover all of this and still have money left over each month.

As such, while the income requirements are not as strict as with other types of loans, they still exist, and not all applicants can meet them. However, the income requirements have resulted in VA home loans having the lowest foreclosure rate of any type of loan.

Other Eligibility Criteria

In addition to the guidelines established by the Department of Veterans Affairs, when obtaining a VA loan through a private lender, that lender has the right to demand borrowers meet other criteria. These can range from a maximum amount of debt to a specific minimum credit score. You will need to ask the lender exactly what requirements they have before you decide on how to move forward.

What to Expect When Applying for a VA Loan

The first step in the process is determining eligibility, either on your own to the best of your ability or with an approved lender. From there, you apply for your COE. If approved, you finalize the application and provide the needed documents to your lender of choice.

From the moment the borrower enters into a contract for a home, the VA loan process takes about 45 days. However, in some cases, it can wrap up faster, while in others, it may take much longer.

To learn more about the VA loan process, or determine your eligibility, speak with one of our VA loan specialists today. ​

The Advantages of VA Loans

The VA loan program is one of the easiest ways for current and former service members to make home ownership a reality. The loans have flexible terms and are backed by the government. They also offer significant benefits that can make these loans work in situations where others simply aren’t feasible. So, what are these benefits?

No Down Payment

Service members tend to move around a lot as part of the nature of the job, and this can make saving up money difficult. VA loans are designed to address this common hurdle by eliminating the need for a down payment. When combined with VA loan interest rates, this ensures that current and former service members can afford to buy a home and pay it off within a reasonable timeframe.

No Private Mortgage Insurance

When borrowing from a conventional lender, homeowners have to put down at least 20 percent of the home’s value as the down payment or spend a significant amount each month on private mortgage insurance. VA loans have no private mortgage insurance requirement because the government itself backs the loans. This allows the borrower to keep more of their money and makes it easier to build equity.

Better-Than-Average Interest Rates

Interest rates are not just a way for lenders to make money; they are also there to protect them against the risk they take on when they issue the loan. But with VA loans, the government backs them with a guaranty. This means lenders take on less risk, and they can pass that on in the form of interest rates that are as much as a full percent lower than the industry standard.

Flexible Income Definitions

With traditional loans, things like housing allowance are not allowed to be considered as part of the borrower’s income. However, with a VA loan, the Basic Allowance for Housing (BAH) is counted as income and can be used to both document financial stability and to pay on the loan.

No Prepayment Penalty

With conventional loans, it is common for lenders to penalize borrowers who pay off their loans early. But this is not the case with VA loans. With these loans, borrowers can pay them off in full at any point without needing to pay a penalty.
If these VA loan advantages sound good to you, it is time to learn more. Contact one of our loan specialists to find out if you are eligible.

Refinancing With a VA Loan

The Department of Veterans Affairs offers numerous ways to make homeownership more accessible for those who have served in the United States Military. One way that they do this is giving current and former service members the option to refinance with a VA loan. Borrowers can take advantage of lower interest rates to bring down their mortgage payments and even get cash back to use on paying down debt, home renovation, and other items.

Types of VA Loan Refinancing Available

There are two programs offered to VA borrowers to let them refinance and take advantage of a lower interest rate. They are the VA Streamline Refinance—sometimes called the Interest Rate Reduction Refinance Loan—and the VA Cash-Out Refinance.

The VA Streamline Refinance is ideal for those who already have VA loans and want to take advantage of dropping interest rates and lower their monthly payments. This type of refinancing requires minimal paperwork and the borrower can add the closing costs to their overall loan amount, allowing them to avoid out-of-pocket costs. In some cases, an appraisal will be required, but not always.

VA Cash-Out Refinance can be used by someone with an existing VA loan or a conventional loan from another lender. It is best for those who have a solid reason for needing access to cash. The borrowers take out a loan against the equity in their home, getting the value in cash. Due to the currently low interest rates, this can be an ideal way for a veteran or active service member to repair their home, take care of an emergency, or handle other financial concerns.

Eligibility for VA Loan Refinance

Overall, if someone is eligible for a VA loan, they are also eligible for refinancing with a VA loan. Applicants must meet at least one of the following criteria:

They served a minimum of 90 consecutive days in active service at a time of war

They served a minimum of 181 days of active service during a time of peace

They served a minimum of six years in the National Guard or Reserves

They are the spouse of a service member who either died in the line of duty or later on as a direct result of an injury incurred during their service

Of course, determining eligibility is only the start. To learn more about the process of refinancing with a VA loan or get professional guidance in your journey, speak with one of our loan professionals.