What Are the Requirements for a VA Loan?

You may have heard that you need a perfect credit score to qualify for a VA loan. While having a good credit score is important, there are other factors that come into play when qualifying for a VA loan.

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General Requirements

There are a few requirements you’ll need to meet in order to qualify for a VA loan.

You must have satisfactory credit

In order to obtain a VA loan, you’ll need to satisfy the lender’s credit requirements. This means having a good credit score and a clean credit history. The exact minimum credit score you’ll need depends on the lender, but it’s generally in the 620-660 range. A higher credit score will give you better loan terms, such as a lower interest rate.

Lenders will also look at your credit history to make sure you don’t have any red flags, such as bankruptcies, foreclosures or liens. They may require you to explain any negative items on your credit report. If you have a clear credit history and a high credit score, you’re more likely to be approved for a VA loan.

You must have a Certificate of Eligibility (COE)

In order to apply for a VA loan, you must first obtain a Certificate of Eligibility (COE). You can do this a few different ways:
-If you have a DD214 form from your time in the military, you can submit that as proof of eligibility.
-If you do not have your DD214 form, you can fill out an Application for Certificate of Eligibility, which you can get from your lender or the VA.
-If you are currently serving in the military, you can also get a COE through the Veterans Online Application website.

Specific Requirements

If you’re a veteran or active-duty military member, you may be eligible for a VA loan. VA loans are government-backed loans that can be used to finance a home purchase or refinance. But what are the requirements for a VA loan? In this article, we’ll cover the specific requirements you’ll need to meet in order to qualify for a VA loan.

You must have a valid Certificate of Eligibility (COE)

The first step in getting a VA direct or VA-backed home loan is to apply for a Certificate of Eligibility (COE). This confirms that you satisfy the service requirements for VA benefits.

If you’re a Veteran or reservist, you can get your COE through eBenefits, by mailing in evidence of your service to the Veterans Benefits Administration (VBA), or in some cases, you can get a COE through your lender.

If you’re eligible for a surviving spouse benefit, you can apply for your COE through eBenefits or by mailing in evidence of your and your spouse’s service to VBA.

If you have questions about getting your COE, contact the nearest Regional Loan Center.

You must be a first-time homebuyer

You may be eligible for a VA loan if you are a first-time homebuyer. A first-time homebuyer is defined as a borrower who has not owned a home within the past three years. If you are married, only one spouse must meet this requirement. You must also intend to live in the home as your primary residence.

You must have a qualifying credit score

To obtain a VA loan, you’ll need a FICO® Score of at least 580 to qualify for a VA loan with a 3.5% down payment.

A higher credit score will usually earn you a lower interest rate on your mortgage, which could save you money over the life of your loan. According to Ellie Mae, the median FICO® Score for all closed loans in August 2019 was 723—well above the 580 minimum.

Even if your score is below 580, all is not lost. Veterans and military members with service-related disabilities can apply for a VA Loan through a special process. You’ll need to get a Certificate of Eligibility from the VA andobbtain approval from the lender—but it can be well worth the effort if you’re eligible.

You must have a qualifying debt-to-income ratio

In order to get a VA loan, you’ll need to meet certain lender requirements. Perhaps most importantly, you’ll need to prove that you can afford the loan — in other words, that you have a qualifying debt-to-income (DTI) ratio.

Your DTI ratio is a measure of your monthly debt obligations versus your monthly income. To calculate your DTI, your lender will add up all of your monthly expenses (including things like your mortgage payment, car payments, credit card payments, student loans, etc.) and divide it by your gross monthly income. The result is expressed as a percentage.

For example, let’s say you have a gross monthly income of $4,000 and monthly debts (including your mortgage payment) of $800. Your DTI ratio would be $800/$4,000, or 20%.

Most lenders prefer to see a DTI ratio of 36% or less. If your DTI ratio is too high, you may have difficulty qualifying for a VA loan. However, there are some exceptions — for instance, if you have a strong employment history or other compensating factors that can offset a high DTI ratio.

If you’re not sure what your DTI ratio is, or whether it’s high enough to qualify for a VA loan, we can help. Our Home Loan Specialists are available 24/7 to answer any questions you may have about the VA loan process.

You must have a valid Social Security Number

A key requirement for VA loan eligibility is honorable military service. You or your spouse must meet length-of-service or service commitment requirements to be eligible:
• Active duty service members must have served at least 90 days during wartime or 181 days during peacetime.
• National Guard and Reserve members must have completed six years of service or been called to active duty for at least 90 days.
• You may also be eligible if you are the surviving spouse of a veteran who died in service or as the result of a service-connected disability.
If you’re not sure whether you meet the length-of-service requirements, contact your nearest VA regional office, or reach out to a VA-approved lender. Lenders are trained on VA eligibility and can often guide you through the process quickly and easily.

You must be a U.S. Citizen

In order to obtain a VA loan, you must be a U.S. Citizen or a qualified non-citizen and have available VA benefits. You can use your VA loan benefits multiple times; however, you are only allowed to have one outstanding loan at any given time. You must also intend to occupy the home as your primary residence. If you are not a first-time homebuyer, you must not have had any ownership interest in a home within the past 12 months in order for the property to be considered your primary residence.

You must have a valid U.S. mailing address

To obtain a VA loan, you must have a valid U.S. mailing address. You must also be a veteran, active-duty service member, reservist, or National Guard solder, and you must either have served for at least 90 consecutive days during wartime or 181 days during peacetime.