VA Loan Eligibility
If you currently serve in the military or are a veteran, you’re probably eligible for a VA loan.
Insured by the United States Department of Veterans Affairs, VA loans are a benefit available to those who’ve served our country. These loans don’t require a down payment or mortgage insurance, and they tend to have affordable interest rates. Let’s take a look at the specifics of VA loan eligibility.
Who’s Eligible For A VA Loan?
Most veterans and active-duty military members are eligible for VA loans. There are specific length-of-service requirements that determine your eligibility, and your discharge reason also plays a role. You can see complete service requirements for the VA loan program on the Department of Veterans Affairs (VA) website.
If you’re the spouse of a military member or veteran who died in service or from a service-related disability, you may also be eligible for a VA loan. Full eligibility requirements for spouses are also available on the VA website.
Once you figure out whether you’re eligible, the next step is to get a Certificate of Eligibility to show your lender that you meet the service requirements for a VA loan.
What Is A VA Certificate Of Eligibility?
A Certificate of Eligibility (COE) is a document that shows your mortgage lender that you’re eligible for a VA loan. To get a COE, you need to demonstrate proof of service. The proof you need to submit varies based on whether you’re an active-duty military member, a veteran, a surviving spouse, etc. You can see exactly what proof you need on the VA website.
Once you’ve rounded up these documents, you have a few options to get your Certificate of Eligibility. You can apply on the VA’s eBenefits website or mail in your documents using VA Form 26-1880. Your lender may also be able to help you get your COE; if you use Quicken Loans®, we’ll help you get your COE to make the loan process easier for you.
Other VA Loan Requirements
Once you’ve verified that you meet the service requirements for a VA loan, you need to make sure your income, assets and credit check out, as well as the property you’re buying.
You can only use a VA loan to buy a primary residence – i.e., the house you plan to live in. You can’t use a VA loan to buy a second home or investment property.
VA loans can also be used on condos and manufactured homes, but not all lenders will finance loans for these property types. If you’re getting your loan with Rocket Mortgage®, you can get a VA loan for a condo, but not for a manufactured home.
Whatever property you buy must meet the VA’s minimum property requirements (MPRs). MPRs ensure the home is safe, structurally sound and sanitary. A VA appraiser will conduct an inspection to ensure the home meets the MPRs. If any MPRs are not met, repairs will need to be made before the loan can close.
The VA doesn’t require a specific minimum credit score for VA loans, so the credit requirement varies by lender. The minimum credit score for a VA loan from Quicken Loans® is 620.
Your lender will evaluate your debt-to-income ratio (DTI) when considering your ability to pay back the loan. Your DTI represents how much of your monthly income goes toward paying back debt.
The VA doesn’t set a specific limit for DTI, so this requirement varies by lender as well. If you get a VA loan through Quicken Loans®, you can have a DTI up to 60% (including the mortgage) for a fixed-rate VA loan, and a DTI up to 50% for an adjustable rate VA loan. However, this requirement varies slightly depending on your credit score, your loan-to-value ratio and other factors.
VA Loan Limit
The VA doesn’t limit how much you can borrow, but there is a cap on the VA’s guaranty – which is the amount of money they’ll back if you default on your loan. According to the VA, the loan limit for a no-down-payment VA loan is $453,100 in most of the country. Certain high-cost areas have higher limits.
Down Payment And Assets
VA loans are one of the few loans that don’t require a down payment. However, your lender may have specific requirements for a no-down-payment VA loan. For example, they may require that you have a higher credit score if you’re putting down less than 10%.
It’s important to keep in mind that “no down payment” doesn’t mean “zero cost.” Here are some other costs to be prepared for, even if you’re putting 0% down:
- Funding fee: Most people who get a VA loan are required to pay a funding fee, which covers the cost to taxpayers. The funding fee ranges from 1.25% to 3.3% of your loan amount. The cost of the fee is determined by your type of service, the size of your down payment, whether it’s the first time you’re getting a VA loan and whether you’re buying or refinancing.
- Reserve funds: Most loans require you to have additional money in the bank that you’re not using for upfront costs. This ensures that you’ll be able to make payments once your loan closes. The amount of leftover funds you’ll need is determined by the cost of your mortgage payment – including principal, interest, taxes and insurance. Most borrowers need to show that they have two months’ worth of mortgage payments in the bank after the down payment and closing costs.
VA loans make homeownership affordable for people who’ve served our country, and include benefits such as no down payment or mortgage insurance, and affordable interest rates.
To get started with your VA loan purchase or refinance, you can apply online with Rocket Mortgage® by Quicken Loans®. You’ll be able to see your mortgage options and understand if a VA loan is right for you.
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