VA loans can be a viable option for those who are eligible. There are relatively strict guidelines as to who can obtain a loan with VA financing, and the first step to finding out if you're qualified is to file for a Certificate of Eligibility.
You can apply for a Certificate of Eligibility by filling out a governmental form called the VA Form 26-1880, Request For a Certificate of Eligibility For Home Loan Benefits. You should present this form, along with your military service documents, to a VA Eligibility Center. This document is available for download and print online at the VA home loans government website. If you don't have proof of military service, it may be possible for the VA to establish this for you. However, it's best to have all documentation ready for quicker processing time.
Many lenders also have access to the Certificate of Eligibility, and through an internet system called ACE, they can quickly process your request and find out if you are eligible for a VA loan. If you choose to find out through your lender whether or not you can obtain a Certificate of Eligibility, it is necessary to have all proof of service records. Depending on circumstances, the VA may not be able to process your request through this method. The best way to find out is to ask your lender for more advice.
Veterans who served active duty in the Armed Forces after World War II and were discharged under terms other than dishonorable are eligible for VA home loan benefits. During war time periods, and active duty service, the veteran must have, at the minimum, 90 days of service on their records. If a veteran has served only during peacetime periods, the active service requirement is 180 days. This is true for active duty military personnel, as well. Enlisted service veterans who served after 1980 and officers who served after 1981 must have completed 2 years of service to be eligible. Selected Reserve and National Guard members are also eligible if they have served 6 years of service and were honorably discharged.
You may still be eligible for more entitlement even if you've taken out a VA loan in the past. Because the entitlement amounts have increased over time, there may be a difference between the amount you were initially entitled to when you first took out your loan and the amount the government allows now. Currently, the entitlement amount for houses under $144,000 is $36,000, and over $144,000 is $60,000. So, for example, if you took out a VA loan in 1975 and used $12,500 of your entitlement amount, you may still be eligible for an additional $23,500 (or more).
However, to be eligible for this second entitlement, you must have either sold your house and paid the original loan amount in full, if you still own the home but have paid the full amount of the loan, or if another veteran-transferee agrees to assume your loan and transfer his or entitlement to you.
There are several requirements that must be met before your VA loan is approved. First of all, you must hold a valid Certificate of Eligibility, proving you are qualified to receive the VA loan. You must take the loan for a valid purpose - a house, townhouse, condominium or other governmentally approved reasons. You must intend to occupy the house within a reasonable time period after closing. Your credit must be satisfactory, and the income you and your spouse receive must be established and adequate to pay the monthly mortgage.