Military personnel put their lives on the line to protect their country. Unfortunately, when they retire, the transition is not always smooth. It is estimated that 11% of the Americans that are homeless are veterans. While this should never happen, it the sad reality.
However, according to the Veterans Association, there are an estimated 19 million veterans in the U.S. Veteran Association Home Loans, which help thousands of veterans to get homes every year.
However, not everyone is guaranteed to secure a home loan. This article looks at the eligibility requirements for the VA home loan programs.
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Length of Service
VA home loans are for active and retired service members. However, not everyone is eligible. For you to qualify, you must have attained a minimum active duty requirement. The requirements vary depending on the time of service. For those who are on active duty, you must have served 90 continuous days. Veterans who served during peacetime must have 181 continuous days of active duty.
You may still qualify without meeting the length of service under exceptional circumstances. For instance, if you got discharged due to a disability. Check with your VA for more details. You may even be eligible if you got an “other than honorable discharge.”
Loan Certificate of Eligibility
A certificate of eligibility(COE) is a form issued by the Department of Veteran Affairs to indicates that a borrower is eligible for a VA loan. To get the COE, you must meet specific requirements.
- For one, you must have 181 days of service during peacetime.
- Ninety days of service at wartime.
- You a surviving spouse of a veteran.
Applying for a COE is not difficult. You can get the forms from the VA website. Alternatively, you can also work with your lender to get the certificate of eligibility. Remember to make sure you bring along proof of service and fill the DD Form 214.
VA Loan Credit Score Requirement
Generally, VA home loans don’t have a credit score requirement. However, each lender is free to set its limit. The average credit score limit is between 580 and 620 points. This is significantly lower than civilian credit score limits, which are often in the 760 points. Lenders will also pay attention to your credit history and how often you pay loans on time.
Credit report agencies factor in the information when calculating the credit score. If you have a history of paying bills late, your chance of getting the loan is reduced. Your credit score can also take a hit if you have filed for bankruptcy in the past. Since credit reports carry such weight, it is always a good idea to check for errors.
The VA does not impose any income limits on veterans. However, the lender will need assurance that you will be able to keep up with the payments. To that end, the VA uses unique criteria known as residual income. It refers to the amount of money one has left after paying their utility bills, taxes, and insurance.
The residual income requirements vary depending on the family size. The larger the family, the lower the residual income requirement. This value also varies from state to state. For instance, in California, the limit is as high as $1000, while it is somewhere in the $400 range in the South. Income from non-consistent sources, such as lottery and gambling, are non-residual, and they are not considered.
Minimum Property Types Requirement
Although the VA home loan exists to help veterans get homes, there are limits to property types. At the top of the list, the VA ensures that the building is structurally sound, safe, and sanitary. To ensure the property meets the requirements, lenders have to hire a VA-approved appraiser to take a look at the house.
VA appraisals are not as detailed as pre-sale inspections. They are only done to determine the safety of the occupants. Usually, the appraiser has about 21 days to write the reports after the assignment. Here are some of the appraisal guidelines.
- The property should have enough living space for the occupants.
- The property is safely accessible via both private and public means.
- There is safe water supply, sewerage, and water disposal services.
- All crawl spaces must be well-ventilated and easily accessible.
- Exterior paint should be intact and provide adequate protection from the elements.
Bottom Line on VA Loan Eligibility
The VA doesn’t offer loans, but they have a say on who is eligible. VA home loan programs exist to help veterans get roofs over their heads at affordable rates.
Unfortunately, not every veteran qualifies. It helps to know the eligibility requirements before you approach the VA for a home loan. It is easier to get your paperwork in order and improve your standings. We hope this article helps you to get your documents in order before applying.