Last Updated on January 16, 2023 by Bob Filipczak
If your first questions about VA loans are “What are the VA loan requirements” and “Am I eligible?”, then you’ve come to the right place. We will also give a quick VA loans 101 to explain what they really are and how to get a VA loan. As with many federal government benefits, determining eligibility is half the battle. Fortunately with VA loans, it’s not too complicated. Better yet, Homes for Heroes can help you find out how to qualify for a VA loan.
The VA Loan Program
The VA loan program is designed to help military personnel and veterans afford and purchase a new home. They can help you at many stages of the home ownership journey, because helping you find a great home within your budget is an acknowledgement of your sacrifices – and that can make a significant difference in your life.
The military VA Home Loan program was established as part of the GI Bill right after World War II. It saw its 75th birthday in 2019, and it is still one of the most popular benefits offered to active duty military members and eligible veterans. VA loans have helped more than 25 million veterans and active duty military service members since it began, and it helped 1.2 million heroes in 2020 alone.
It is overseen by the U.S. Department of Veterans Affairs.
There is a big three in VA loans, and these are the things most people mention when talking about how awesome the program is:
- No down payment
- Lower interest rates
- No private mortgage insurance
Together these benefits will save you thousands or tens of thousands of dollars. There is a longer list of benefits that includes things like the fact that you can use VA Loans over and over again throughout your lifetime. It is also extended to the surviving spouses of service members who have passed.
If you are still on the fence, you should also know that there are four different loan guarantees in the VA system that can help you purchase a home – but also refinance it further down the line. The suite of loan packages from the VA are:
Purchase a Home
This is the main VA loan that will help you get a mortgage to buy a home.
The VA Interest Rate Reduction Refinance Loan (VA IRRRL) is a refinance loan you can use to reduce the interest you pay on your mortgage. If you can successfully refinance, it can reduce your monthly payment in the short term, AND your overall mortgage payments in the long term. This is known as a streamline refinance by the VA. It requires a lot less documentation, fewer requirements and less stress overall. It is also a fast refinance and can usually be in place in about 30 days. VA loan requirements for this option make it open only to those who already have a VA mortgage.
VA Cash Out Refinance
This is another refinance option from the VA, but this lets you refinance your mortgage and turn the equity you’ve earned in the property into cash. You can use this cash to repair your home, renovate it, install energy efficient elements, pursue your education, or take care of emergencies (for example, medical bills).
This loan is not a streamline refinance and it is very much like a typical refinance with all the rules and documents. This option is open to VA borrowers and conventional mortgage holders who qualify for a VA loan, but may have missed it the first time out. That ability to convert conventional loans into VA mortgages, and get cash back, makes this a very attractive option under the right circumstances.
Native American Direct Loan
If you’re a veteran, and either you or your spouse is Native American, you could be eligible for the Native American Direct Loan (NADL). These loans let military veterans and active-duty service members buy, build or improve a property on federal trust land. If you qualify, you can also use this loan to refinance your current mortgage.
PHASE I: Veterans Affairs VA Loan Requirements
In obtaining a VA loan, it’s important to remember that the Veterans Administration only guarantees and insures the loan. It doesn’t give you the actual money. That comes from a private mortgage lender, broker or bank. All three of these organizations have VA loan requirements for lending funds.
Consequently, the first thing you need to do is qualify for the VA loan guarantee. Who qualifies for a VA Loan? Those criteria include:
- Serve for 90 consecutive days of service during wartime or 181 days of service during peacetime
- 2 years of service if enlisted in the Post-Vietnam era
- Enlisted six years in the National Guard or Reserves
- Surviving spouse of a veteran who died from a service-related injury or disability
- Surviving military spouses of a POW/MIA service member
- Surviving military spouses of a service member killed in the line of duty
VA loans are available to those in the uniformed service and the armed forces. This includes:
- Air Force
- Marine Corps
- Space Force
- Coast Guard
- National Oceanic and Atmospheric Administration (NOAA)
- Public Health Service
This includes veterans of these organizations, and National Guard and Reservists.
VA Loan Qualifications: The Certificate of Eligibility (COE)
The Certificate of Eligibility (COE) is exactly what it sounds like: it verifies that you meet the appropriate VA loan requirements. It also tells you how much the VA loan will cover, meaning how much the The Department of Veterans Affairs will guarantee your loan.
- Basic Entitlement: The basic entitlement will cover a $144,000 mortgage loan. If that seems low, it is. Consequently the VA changed the basic entitlement to keep up with the market.
- Secondary Entitlement: It came up with a secondary entitlement that covered home loans up to $647,000.
Remember: There is no upper limit on a VA Loan, but they will only insure your loan up to that set entitlement. The rest is up to you and your private mortgage broker.
The VA Home Loan Certificate of Eligibility form is easy to find online. On page 3 of the form, there is a list of addresses if you want to send them a request for a Certificate of Eligibility (VA Form 26-1880). You can also mail your completed VA eligibility form to the appropriate office on that list.
If you’ve already got a private lender ready to work with you on your VA loan, they can request a Certificate of Eligibility directly from the Department of Defense. There’s an online system called Web LGY that has this information online and it can be immediately downloaded. You can also do it yourself by using the VA’s eBenefits portal.
VA loans eligibility does not mean you have been approved for the guarantee and insurance. For that, it’s best to work with your chosen private VA lender or mortgage broker. They can help you apply for VA loan.
Work with a Homes for Heroes mortgage specialist who prioritize assisting military personnel get a home mortgage by reducing their lender fees. The average savings is $500 (if you use the whole Homes for Heroes team, the average reward is about $3,000). Sign up today to speak with our local mortgage specialist and how they can help you with a VA loan and save you some money.
PHASE II: Private Lender VA Loan Eligibility
Getting a good private lender on your side is highly recommended to assist you with your VA loan requirements. That’s where Home for Heroes can help. In addition to the other resources and rewards we provide military members, we connect homebuyers with mortgage lenders who understand the challenges of veterans and active duty service members. They agree with us: that military members deserve all the help we can give them as they look for a new home. They are a vital support role in the VA loan application.
There are some factors in your finances that the VA loan system doesn’t consider when it approves you. However, private lenders do require you to meet some of those criteria, so you’re not completely off the hook. Some of the factors that mortgage brokers will want to know that the VA doesn’t require include:
- Credit Score – The VA has no minimum credit score requirements, but private lenders are probably going to want you to have a credit score above 620.
- Debt-To-Income (DTI) Ratio – This is a ratio of debts you owe (borrowed money such as a car loan, student loans, and unpaid credit card balances, etc.) The VA doesn’t count this but your lender may want it to fall into a certain range as a measure of your ability to afford monthly mortgage payments.
- Closing Costs – There are closing costs that the VA will not allow you to pay, such as the real estate commissions and attorney fees, so you will want to have your private lender on your side to help you negotiate those payments through the seller.
Since you are dealing with a private company that will actually issue the mortgage, their requirements need to be met in order to get your loan.
Don’t forget to talk to your mortgage specialist about getting pre-approved for a loan. With pre-approval, you can look for houses and make solid offers with confidence.
VA Loan with Homes for Heroes Saves You More Money
At Home for Heroes we understand the importance of developing a great working relationship with your mortgage loan officer, and real estate agent if you’re looking to purchase a home.
If you want to purchase a home but are not sure where to start, we can help. When you sign up with Home for Heroes, we connect you with our local real estate and mortgage specialists who are both committed to assisting our armed forces members in finding a home and saving them money in the process. The average savings received after closing with our specialists is $3,000. This is given to you as a Hero Rewards savings check that you can cash out and use however you please –renovations, appliances, furniture, save it for a trip, etc.
If you are looking to refinance, we will connect you with our local mortgage specialist to put together a game plan for finding the right home loan for your needs. Our mortgage specialists offer reduced lending fees to military personnel and the average amount is $500 saved at closing.
This is given to you as a Hero Rewards savings check that you can cash out and use however you please –renovations, appliances, furniture, save it for a trip, etc.
The services and savings we provide our heroes with our local specialists is our way to say thank you for your service to our country. Sign up today to speak with our local specialists. We would be honored to work with you on applying for a VA loan.