Service Requirements

To be eligible for a VA loan, you must be:

• A veteran who has served 90 consecutive days of active service during wartime, or
• A veteran who has served 181 days of active service during peacetime, or
• A National Guard or Reserve member who has served more than six years, or
• The spouse of a service member who has died in the line of duty or as a result of a service-related disability.

Certificate of Eligibility (COE)

You need to obtain a COE to prove to the lender that you meet the eligibility requirements for a VA loan. This can be requested online, through the mail, or by your lender.

Credit and Income Requirements

VA loans do not prescribe a minimum credit score, but lenders typically have their own internal requirements, often looking for a credit score of 620 or higher. You must also have stable, reliable income that can cover your monthly expenses, including the new mortgage payment, and have a suitable debt-to-income ratio.

Primary Residence Requirement

VA loans are intended for primary residences. You must certify that you intend to occupy the home.

No Down Payment and No PMI

One of the key benefits of a VA loan is that it does not typically require a down payment and there's no requirement for Private Mortgage Insurance (PMI). However, there is a VA funding fee, which can be rolled into the loan amount.

Property Requirements

The home you purchase with a VA loan must meet certain safety, sanitation, and structural integrity standards. A VA appraisal is required to assess the condition of the property.

Sufficient Residual Income

The VA also requires borrowers to have a certain amount of money left over each month after all major expenses are paid. The specific amount depends on your family size and where you live.

Loan Limits

While there is no maximum loan amount for a VA loan, there is a limit on the amount the VA can guarantee. This affects the amount of money a lender will lend without requiring a down payment.

Loan Assumption

If someone else wants to take over your VA loan, they must first get approval from the lender or the VA.

Funding Fee

This fee goes directly to the VA to ensure the program keeps running for future generations of military homebuyers. The amount of the funding fee varies based on the type of loan and the borrower's circumstances but can be waived for those with service-connected disabilities and some surviving spouses.

Exemptions from the Funding Fee

Certain individuals are exempt from paying the VA Funding Fee, including:

• Veterans receiving VA Disability Compensation.
• Veterans entitled to receive disability compensation but receiving retirement or active duty pay instead.
• Surviving spouses of veterans who died in service or from a service-connected disability, receiving Dependency and Indemnity Compensation (DIC).
• Service members on active duty who have received a Purple Heart.

It's important for individuals who believe they may be exempt to provide the appropriate documentation to the lender to ensure the fee is waived.

It's important to work closely with a lender experienced in VA loans to navigate the process.