For servicemembers looking to become homebuyers, a VA Loan can offer a long list of benefits and advantages. But navigating the process can often lead to an equally long list of questions. Who is eligible for a VA loan? What paperwork do you need to prove your qualifications? And what exactly is a VA home loan certificate of eligibility? Don’t worry, we’re here to shed some light on the subject.
When it comes to determining VA loan eligibility, there are two parties at play: The United States Department of Veterans Affairs (VA), and the financial institution that’s lending your mortgage. They both have their own factors and requirements they need to cross off in order to approve your loan.
The VA is more concerned with service history, duty status, and discharge classification. They’ll check if you’re retired, disabled, active military, National Guard or in the reserves. In general, if you’ve served for a certain period of time and have been honorably discharged, you’re cleared to move forward with your lender and their credit underwriting requirements.
The mortgage lender will focus on the kinds of factors that apply to all borrowers: classic statistics like credit score, debt-to-income ratio, job security, and employment history. They want to make sure you’re financially capable of repaying the mortgage. A VA approved appraiser is then ordered through the VA and conducts a home appraisal to confirm that your house meets the VA’s minimum property requirements.
That’s the basic scope of how VA loan eligibility is determined—but specific circumstances can (and will) affect individual decisions. We’ll get into a couple of those examples here.
Who is eligible for a VA loan?
The VA provides general guidelines for VA loan eligibility. However, it’s important to note they do vary based on your service status: Whether you're a veteran, on active duty, or serve/have served in the National Guard or Reserve. Here are some basic guidelines that you should be aware of:
- Any veteran who served after August 2nd, 1990 is eligible if they served for 24 continuous months.
- Anyone who is current active-duty is eligible after 90 continuous days of service.
- National Guard members and Reservists become eligible after 90 continuous days of service.
National Guard VA loan eligibility
As important members of the U.S. military, National Guard members are also allowed to reap the rewards of purchasing a house with a VA loan. But National Guard VA loan eligibility does have its own unique requirements.
The main difference is the length of time in service. For active-duty members, you must be able to show proof of at least 90 days of service, including at least 30 consecutive days (your DD214 must show 32 USC sections 316, 502, 503, 504, or 505 activation). For non-active National Guard members, you’ll need at least six years of creditable service, with honorable discharge or retirement.
VA loan eligibility for Reservists
Reservists also can enjoy VA loan benefits. Similar to the requirements for National Guard VA loan eligibility, members of the reserves also need to meet a minimum service length. And also like the national guard, that minimum service length is six years (or 90 days of active duty).
As long as you’ve served in the reserves for at least six years with honorable discharge, retirement, or transferal, then you’re on track to meet the VA loan reserve requirements.
VA home loan eligibility with other than honorable discharge
Now, what if you apply for a VA loan with other than honorable discharge? Does that disqualify you from receiving VA loan benefits? Not necessarily.
As a matter of fact, any discharge besides dishonorable can qualify for VA loan benefits. That includes hardship, early out, reduction in force, medical conditions, and so forth. The only classification that does not qualify for a VA loan is dishonorable discharge. And even still, servicemembers who have been dishonorably discharged can apply for a reclassification. Consult your VA guidelines for more information.
VA Certificate of Eligibility (COE)
A key part in meeting VA home loan eligibility requirements is the documentation that backs up your claims. That’s where a VA Certificate of Eligibility, or COE, comes in. A COE is a document produced by the VA that essentially informs your mortgage lender that you meet the necessary military service requirements. Again, you must also meet lender credit, income and asset guidelines to obtain the VA loan.
You can apply for one by filling out form 26 1880 online. Keep in mind this process can take over a month to come through. But once you’ve secured your COE, you’re on your way to enjoying a new home with all the advantages of a VA loan.