VA Loan Eligibility Guidelines
VA Home Loans have helped more than 21 million veterans, service members and surviving spouses achieve the dream of homeownership. This benefit – most praised by homebuyers for offering $0 down, low rates and removing the added cost of mortgage insurance – is made possible by the Department of Veterans Affairs guaranteeing a portion of each loan in case of default.
Veterans who are eligible for a VA loan have what is referred to as VA Loan entitlement, which is a specific amount that the Department of Veterans Affairs promises to guarantee.
This entitlement is what gives lenders the confidence to extend VA Loan financing with exceptional rates and terms. However, to be eligible for the VA Loan, potential homebuyers must first meet the basic service requirements.
VA Loan Service Requirements
Service requirements fall into two categories: wartime and peacetime. Potential homebuyers must satisfy only one of the service requirements set forth by the Department of Veterans Affairs to be eligible for a VA Loan.
These service requirements state that veterans who served during wartime must have been on active duty for at least 90 consecutive days. Conversely, those who served during peacetime must have served a minimum of 181 days. Veterans of the National Guard or Reserves must have served for at least six years unless otherwise eligible.
Spouses of service members who died in the line of duty, or as the result of a service related disability, may also be eligible. Learn more about VA Loans and suriving spouses here.
To verify VA Home Loan eligibility, it is best to consult a VA Loan specialist.
VA Loan Certificate of Eligibility
Applicants that meet the basic service requirements will also need to acquire a Certificate of Eligibility (COE). VA approved lenders use the COE to verify your eligibility for home loan benefits; however, you do not need your COE to start the VA Loan process – or even to determine eligibility – your VA approved lender will help you with this.
Homebuyers can obtain their Certificate of Eligibility through a VA approved lender using the Web LGY system, the eBenefits portal on the Department of Veterans Affairs website, or through mail using VA Form 26-1880, Request for a Certificate of Eligibility for Home Loan Benefits. This document is available for download and print online on the VA’s website.
However, according to the VA, veterans are encouraged to ask their lender about the Web LGY system – an internet-based application that allows approved lenders to access your Certificate of Eligibility in seconds.
VA Loan Property Requirements
Residences come in all shapes and sizes, from townhomes, condominiums to single-family homes. And, while the types of dwellings differ greatly, potential homeowners using a VA Loan will need to focus on a select group in order to receive their final approval.
Single-family homes are the standard when pertaining to the VA Loan; however, many other types of housing can also win VA Loan approval, including condominiums, townhomes, modular homes, new construction and manufactured homes.
Condominiums and townhomes broadly meet VA Loan requirements; however, not every condo or townhome is eligible. For a condominium to be eligible, the entire complex must meet VA approval before a buyer can obtain financing for their desired unit. To determine if the potential complex is eligible, the VA provides this interactive list of approved complexes.
Modular homes, which are prefabricated in a factory – or secondary location – and assembled on the homeowner’s property by a licensed contractor, are eligible for the VA Loan. New construction is also possible with a VA Home Loan.
Manufactured homes, or mobile homes, may be eligible; however, finding a lender to financing this type of home is very difficult. Manufactured homes are considered a depreciating property, which many lenders hesitate to take a chance on.
VA Loan Credit and Income Eligibility
Interested homebuyers must meet basic credit and income requirements. The Department of Veterans Affairs does not impose a credit score minimum, but most lenders will look for a credit score of 620 or greater to obtain home financing.
As for income, the VA works to protect homebuyers by ensuring that they can afford the mortgage they are applying for. One way this is done is through your debt-to-income ratio – or the ratio of you total monthly debt to gross monthly income.
The VA uses a DTI benchmark of 41 percent, which is higher than what you’ll find with conventional and even FHA financing. In general, those with a higher DTI are at an increased risk of monthly expenses outweighing their income. This can be seen as a warning sign of default for lenders.
Although the VA requires a 41 percent DTI ratio, lenders may allow for higher DTI ratio.
VA Loan Entitlement
VA Loans are for first-time and repeat homebuyers alike; meaning, if you used a VA Loan in the past, you still may be eligible for a subsequent VA Home Loan.
It's also possible for qualified borrowers to have more than one VA loan at the same time. Veterans and service members who have lost a previous VA loan to foreclosure may also be able to obtain another using any remaining second-tier entitlement.
For more information on VA Loan eligibility, see these common VA Loan questions.