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MORTGAGE KNOWLEDGE CENTER

PenFed Mortgage with Confidence

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
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image

VA LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

  1. Home
  2. Mortgage Knowledge Center
  3. What You Need to Qualify for a VA Loan

MORTGAGE

What You Need to Qualify for a VA Loan

What you'll learn: Requirements for VA loan eligibility

EXPECTED READ TIME: 3 MINUTES

February 22, 2021

Do I qualify for a VA loan?

To qualify for a VA loan, you need to successfully complete a three-part process of approvals involving the U.S. Department of Veterans Affairs (VA), a VA-approved mortgage lender, and a home appraiser. The first two steps qualify you for the loan and the third step qualifies the property. Here you’ll find details that will help you understand the VA loan qualification process, so you can focus on moving into your new home.

  1. The VA determines eligibility based on the type and length of the applicant’s service, most commonly through a form called a Certificate of Eligibility (COE). 
  2. Once the VA issues the COE, then the mortgage lender conducts reviews of the applicant’s income, debt, credit, and other financial information.
  3. Applicants are then required to have a VA-approved home appraiser check the property to ensure it is safe, secure, and clean. This process is different than a home inspection. 

What are the service requirements for a VA loan?

First, make sure both the type and duration of your service meet the VA’s requirements. If you fall into at least one of the categories on each of the lists below, you may be eligible for a VA loan.

Type of service:

  • Veterans
  • Active-duty personnel
  • Members of the Reserve
  • Members of the National Guard
  • Some surviving spouses

Length of service:

  • 2 years on active duty
  • 90 days of wartime duty
  • 181 days of peacetime service
  • 6 years in the Reserve or National Guard

If your or your spouse’s service doesn’t fall into one of these categories, or you’re not sure, you may still be eligible. You can find a detailed list of requirements on the U.S. Department of Veterans’ Affairs website. If you still have questions, a PenFed loan officer would be happy to help you.

What is a Certificate of Eligibility?

One way to be sure you meet the VA loan service requirements is to get a Certificate of Eligibility (COE). A COE is a document issued by the VA that proves to the lender that you have met the initial service qualifications for a VA loan. You can apply for a COE through:

  • A VA-approved lender
  • The VA’s eBenefits portal
  • The VA Form 26-1880, which you can send by mail

What are the income requirements for a VA loan?

Once the lender has confirmed the service requirements through the COE, they will review your income, debt, and credit to assess whether you qualify financially for the loan. There are no standard income or debt requirements, but lenders will often check an applicant’s debt-to-income (DTI) ratio. DTI is calculated by dividing monthly debt obligations by gross monthly income. A ratio of less than 41% is considered good, although a higher ratio isn’t necessarily disqualifying. If you can show that you have enough residual income after paying necessary monthly expenses to pay for food, medical care, and other costs, you may still be approved.

Similar to debt and income, there is no VA-dictated minimum credit score requirement for qualification. Instead, lenders are allowed to determine their own minimums, which usually fall between 620 and 660. There are always exceptions to the financial requirements. Discuss these and your specific needs when looking for a VA-approved lender.

Why do I need a home appraisal?

The final step in VA loan qualification is the home appraisal, which is done after confirming both service and financial eligibility. Your lender will find a VA-approved home appraiser, who will check the property to make sure it is safe, secure, and clean. The appraiser is different from a home inspector. The home appraiser will check that the property meets the VA’s minimum property requirements (MPRs), and that the property value matches the price you’re paying.

Once you’ve completed the COE, financial qualification, and home appraisal, you’ll know that both you and your property are qualified for a VA loan. Then, you’ll be ready to close the deal and move in.

For more information about PenFed Mortgages:
 

PenFed Mortgage: 

800-970-7766

Get Started

SIMILAR ARTICLES

What Are the Pros and Cons of VA Loans?

VA loans can be beneficial because of low interest rates, no mortgage insurance requirements, and little to no down payment. PenFed helps you understand the pros and cons of VA loans.

10 Reasons Why You Should Get a VA Loan

The benefits of a VA loan can be a great option for military families and veterans. Learn about the reasons why you should get a VA loan from PenFed Credit Union.

How Does a VA Loan Work?

How does a VA loan work from start to finish? PenFed Credit Union lays out the steps to successfully complete a VA loan from application to closing.

How Do I Know if I Quality for a VA Loan?

What’s involved in VA loan eligibility and qualifications? PenFed Credit Union explains how to qualify for a VA loan, get approved, and everything else to know.
image

VA LOANS

Rates starting at % (APR %)¹

 

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Home Buying Steps

  • Getting Started
  • Finding a Home
  • Getting a Mortgage
  • Home Ownership

Mortgage Topics

  • VA Loans
  • Conventional Loans
  • First Time Homebuyer
  • Home Equity
  • Homebuying 101
  • Checklists
  • Adjustable Rate Mortgages
  • PenFed Top 10
  • Refinance
  • Jumbo Loans
  • FHA
  • Videos

Mortgage Products

  • Mortgage Center
  • Refinancing
  • Home Equity

PenFed HELOC

Rates as Low as % APR* with flexible use of funds

Apply before becoming a member.

After your application, we’ll help you:

1. Discover you’re eligible to become a PenFed member

2. Open a Savings/Share Account and deposit at least $5

Disclosures

1Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on discount point, which equals percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.

*Prime Rate is % as of . The APR for this Home Equity Line of Credit (HELOC) is based on prime plus a margin and can change monthly. Fixed Rate Advances will be amortized over the Fixed Rate Advance Term, with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin, and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes.

  • Annual Fee: Notwithstanding the foregoing, an annual fee of $99 will be assessed on each account anniversary.
  • Home equity lines of credit (HELOC) are variable rate loans and the interest rate is subject to increase after consummation of the loan on monthly basis. Closing costs range between $500 and $8,500 for credit lines of $500,000. Contact a representative for additional details.

Appraisals: PenFed will attempt to establish value via an independent method. If that method is unsuccessful, or the value is not sufficient for the amount requested, an appraisal will be required regardless of CLTV. An appraisal is always required in the following circumstances:

For all loans with a loan amount greater than $400,000.

If an appraisal is required, it must be ordered by PenFed. You will be contacted for authorization and payment prior to ordering. Appraisal fees average $550 to $850 (some run higher).

  • Closing Cost Credit: PenFed will pay most closing costs associated with a home equity line of credit (HELOC), which includes credit report, flood certification, settlement/closing, property ownership and encumbrances search, recording, property search, and quick close. Member is responsible for any city, county, and/or state taxes if the subject property is located in FL, LA, MD, MN, NY, TN, or VA. If an appraisal is required, the member, who is responsible for the fee whether or not the loan closes, will pay the cost.

Interest may be tax deductible, consult a tax advisor for further information regarding the tax deductibility of interest and charges.

Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.

Fixed Rate Advances will be amortized over the Fixed Rate Advance Term with the payment consisting of principal and interest. Your Annual Percentage Rate for a Fixed Rate Advance will be calculated by adding your Prime Rate, your Margin and the Additional Fixed Rate Lock-In Margin. Your Annual Percentage Rate for a Fixed Rate Advance shall not exceed 18% and shall be equal to or greater than % for primary residences and second homes and 4.75% for investment properties.

Property Insurance: Property insurance is required.

Multiple PenFed Loans: Multiple PenFed Equity loans and HELOCs are available as long as the member and collateral qualify (except Texas). For Equity loans and HELOCs the total indebtedness cannot exceed $500,000 for all PenFed Equity and HELOCs combined.

PenFed does not lend on:

  • Mobile homes
  • Co-ops or time-shares
  • Properties that are currently listed on the market for sale
  • Commercial property or property used for commercial purposes, even if a residence is part of the property
  • Undeveloped property (land only)
  • Properties with more than 4 units

Properties that are currently under major construction/renovations: Property must be fully livable, with no safety issues. (Examples: no missing rails from stairs/decks, no open walls with wires showing, missing kitchen appliances/counters, missing bath fixtures or unfinished pool).

  • Additional limitations may apply

Home Equity Line of Credit:

  • This Account has a Draw Period of 10 years, followed by a repayment period of 20 years.
  • If only minimum payments are made during the draw period, the loan balance will not decrease.
  • In Texas, the maximum CLTV available is 80% on owner occupied properties. Additional restrictions apply in Texas, so please ask a representative for details.
  • In all other states, the maximum CLTV is 85% on owner occupied properties and second homes. Additional restrictions or requirements may apply based on application characteristics.
  • Property type of Condo has a maximum CLTV of 80%.
  • The maximum CLTV available is dependent on credit qualification.
  • Rates vary depending on owner occupancy and CLTV and other loan criteria.

Minimum Loan Amount Requirements in all States:

  • For an owner occupied property or second home the minimum loan amount is $25,000 and the maximum amount is $500,000 with a CLTV of 85% or less of the fair market value.

Other terms and conditions apply; call 844-918-4307 to speak with a representative for details. All rates and offers are subject to change without notice. To receive advertised product, you must become a member of PenFed.

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This credit union is federally insured by the National Credit Union Administration. Rates are current as of December 2023 unless otherwise noted and are subject to change.

APY = Annual Percentage Yield
APR = Annual Percentage Rate


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Routing #256078446

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You are leaving PenFed.org and entering a third party Website that is not a part of Pentagon Federal Credit Union.


The content you are about to view is produced by a third party unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Realty, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Realty, LLC, see the Affiliate Business Arrangement Disclosure.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party Website.


The content you are about to view is produced by a third party website that is unaffiliated to Pentagon Federal Credit Union. PenFed takes no responsibility for the content of the page.


IMPORTANT NOTICE

You are leaving PenFed.org and entering a third party site. PenFed Title, LLC is wholly owned by PenFed and this referral may provide PenFed a financial or other benefit.


For more information about the relationship between PenFed and PenFed Title, LLC, see the Affiliate Business Arrangement Disclosure.


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