Who Qualifies for a VA Loan?

You may be surprised to find out that you may qualify for a VA loan.
There are a number of factors that are looked at when determining if you qualify for this type of loan.

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Introduction

VA Loan eligibility is determined by your length of service or service commitment, duty status and character of service. There are other factors that can affect eligibility, like whether you’re a reservist or have been given a medical discharge.

You may be eligible for a VA loan if you are:
-A veteran who has served on active duty, in the National Guard or Reserves, for at least 90 days during wartime or 180 days during peacetime
-A veteran who has been awarded the Purple Heart medal
-A Reservist or National Guard member who has been called to active duty for at least 90 days
-A spouse of a service member who died in the line of duty or as a result of a service-related disability

Basic Qualifications for a VA Loan

You may be wondering if you qualify for a VA loan. The answer is that there are a few qualifications you need to meet. First, you must have served in the military, either in the regular army, reserves, or National Guard. You must also have been honorably discharged from your service.

The Veteran Must Have Served in the Military

All veterans of the United States military are eligible for a VA Loan, regardless of when they served. This includes veterans of the Army, Navy, Marine Corps, Air Force, and Coast Guard. Reservists and National Guard members who were called to active duty by a president are also eligible. The key requirement is that the veteran must have been honorably discharged from service.

The Veteran Must Meet Minimum Time Requirements

In order to qualify for a VA Loan, the veteran must have at least:
-Served 181 days during peacetime
-Served 90 days during wartime
-Served 6 years in the Reserves or National Guard
-Be a spouse of a service member who died in the line of duty or as a result of service-related injuries

The Veteran Must Be Honorable Discharged

An honorable discharge is the only type of discharge that will make a veteran eligible for the full benefits of a VA loan. A dishonorable discharge will make the veteran ineligible for all VA loan benefits. Other types of discharges may or may not make the veteran eligible depending on the circumstances surrounding the discharge.

The Veteran Must Qualify for a Certificate of Eligibility

One of the first steps any borrower should take when they’re considering a VA home loan is to determine whether or not they qualify for one in the first place. Eligibility is determined by the veteran’s length of service or service commitment, duty status, and character of service. Veterans who have been active duty for less than 90 consecutive days during wartime or less than 181 days during peacetime do not qualify. National Guard and Reserve members may also be eligible if they were called to active duty by a president or Congress.

There are also a few other basic requirements:
-The veteran must be a U.S. citizen or legal permanent resident
-The veteran must not have been dishonorably discharged
-The veteran must demonstrate adequate income and creditworthiness
-The veteran must intend to live in the home as their primary residence

Additional Qualifications for a VA Loan

While the vast majority of military members and many civilians qualify for a VA loan, there are a few additional qualifications that must be met. In this section, we’ll go over some of the more common qualifications that are necessary for a VA loan.

The Borrower Must Have a Good Credit Score

In order to qualify for a VA loan, the borrower must have a good credit score. The minimum credit score required is 580. If the borrower has a credit score of below 580, they will need to put down a 10% down payment. A credit score of 620 is preferred, but not required. Depending on the lender, borrowers with a credit score of 580 may still be able to qualify for a loan if they have alternative forms of credit, such as utility bills or rental agreements, that can be used to prove their ability to repay the loan.

The Borrower Must Have Stable Income

To qualify for a VA loan, the borrower must have a steady income. This can come from a job, self-employment, retirement benefits, or any other source that can be documented. The lender will want to see proof of income to ensure that the borrower will be able to make their monthly loan payments.

The Borrower Must Have Sufficient Savings

In order to get approved for a VA loan, borrowers must prove that they have the financial means to make a down payment on the home if required, and also have enough savings left over to cover unexpected costs that may arise during the loan process or after closing on the home.

For most borrowers, this will mean having at least a few thousand dollars saved up in addition to any money they are using for a down payment. Borrowers who do not have enough savings may still be able to get approved for a loan if they can find another lender who is willing to work with them.

The Borrower Must Meet Debt-to-Income Ratio Requirements

Debt-to-income ratio requirements vary by lender, but in general you’ll need a maximum DTI of 41% to qualify for a VA loan. That includes your housing expenses plus all other monthly debt payments, such as credit cards, car loans, student loans, etc.

Conclusion

If you’re a qualifying veteran, active-duty service member, National Guard or Reserve member, or qualifying surviving spouse, a VA loan could help finance your home purchase. You can apply for a VA loan through a private lender, like a bank or mortgage company, or through the Veterans Affairs department. Mortgage lenders will evaluate your creditworthiness and income to determine if you qualify for a VA loan and how much you can borrow. If you’re not sure if you qualify or need help applying, consider working with a VA-approved lender.