Understanding VA Home Loans
The VA home loan program is a significant benefit offered to veterans, active-duty service members, and certain members of the National Guard and Reserves. It provides an opportunity to purchase a home with favorable terms, including no down payment, competitive interest rates, and no private mortgage insurance (PMI).
Service Requirements
Active Duty Service Members
- Must have served 90 consecutive days during wartime
- Must have served 181 days of active service during peacetime
- Currently serving active duty
Veterans
- Must have served 24 continuous months
- Must have completed the full period for which they were called to active duty
National Guard and Reserve Members
- Must have 6 years of service in the Selected Reserve or National Guard, OR
- Must have 90 days of active-duty service during wartime
- Must have been discharged honorably
Surviving Spouses
Eligible surviving spouses include those:
- Of veterans who died in service
- Of veterans who died from service-connected disabilities
- Receiving Dependency and Indemnity Compensation (DIC)
Certificate of Eligibility (COE)
A Certificate of Eligibility proves to lenders that you qualify for a VA-backed loan. You can obtain it through:
- Online: Through the VA's eBenefits portal
- Lender: Many lenders can access the COE through the VA's Web LGY system
- Mail: By completing VA Form 26-1880
Required Documents
- DD Form 214: Certificate of Release or Discharge from Active Duty
- VA Form 26-1880: Request for a Certificate of Eligibility
- Identification: Valid government-issued ID
- Income and credit information: Pay stubs, W-2 forms, and credit reports
Credit and Income Requirements
Credit Score
While the VA doesn't set a minimum credit score, most lenders typically require:
- Minimum score of 620
- Higher scores may qualify for better rates
- Some lenders may accept lower scores
Income and Employment
Lenders will assess:
- Stable Income: Demonstrating a reliable income source
- Debt-to-Income Ratio (DTI): Typically 41% or less preferred
- Employment History: Usually 2 years of steady employment
Property Requirements
Eligible properties must:
- Be your primary residence
- Meet VA minimum property requirements (MPRs)
- Pass a VA appraisal
Qualifying property types include:
- Single-family homes
- Condominiums (VA-approved)
- Manufactured homes
- Multi-unit properties (up to 4 units)
Funding Fee
The VA charges a one-time funding fee to help sustain the program:
| Type of Service | First-Time Use | Subsequent Use |
|---|---|---|
| Regular Military | 2.3% | 3.6% |
| Reserves/Guard | 2.3% | 3.6% |
Note: Veterans with service-connected disabilities may be exempt from the funding fee.
Benefits of VA Home Loans
- No down payment required
- No PMI requirement
- Competitive interest rates
- Ability to use the benefit multiple times
- Possibility of having more than one VA loan simultaneously
- Option to restore entitlement after paying off a previous VA loan
For more information and assistance, visit the VA's official website or work with a VA-approved lender.