What Are the Qualifications for a VA Loan?

Written by Bill MacDonaldMarch 28th, 20233 minute read

What Are the Qualifications for a VA Loan

The VA home loan is a benefit available to qualified veterans who wish to purchase a home or refinance an existing mortgage. VA loans do not require a down payment for a home purchase.

In short, 100% financing and the home seller is permitted to pay all of the veteran's closing costs. VA mortgage rates tend to be lower than other loans.

1. Who qualifies for a VA home loan?

  • You have served 90 consecutive days of active service during wartime, OR
  • You have served 181 days of active service during peacetime, OR
  • You have 6 years of service in the National Guard or Reserves, OR
  • You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability

2. What is a certificate of eligibility for a VA loan?

The Certificate of Eligibility is proof that you qualify for a VA home loan. In most situations, the lender can obtain the COE on your behalf.

3. Income requirements for a VA loan

Veterans should have a two-year work history. There are some exceptions to the two-year requirement. You will need the following when you meet with the loan officer:

  • Copies of your most recent pay stubs covering the last 4 weeks;
  • W-2 statements from the last two years;
  • Federal tax returns for the previous two years if requested by the lender

4. What is the minimum credit score for a VA loan?

The Veterans Administration does not require veterans to have a minimum credit score, however, most lenders will require a credit score of at least 620. Ideally, 660 is desirable. Is your credit score and credit report acceptable? You can obtain a copy of your credit score and credit report from Equifax for free.

If applicable, the lender will need a copy of any divorce decrees and/or child-care statement(s) specifying monthly payments.

5. Assets and cash savings

Bank statements spanning the previous two months are needed by the lender to make sure you have enough money to cover the closing and escrow expenses.

How much can a veteran borrow?

There is no VA loan limit, however, lenders are permitted by the VA to establish their own loan limit.

Debt to income ratio:

Lenders use a simple formula called debt to income to determine the borrower's maximum loan amount. (See VA debt to income guidelines.)

Frequently Asked Questions About VA Mortgages

Can anyone get a VA home loan?
Only eligible veterans who meet the lending guidelines can obtain a VA home loan.

How are VA loans different?
VA loans do not require a down payment and there is no private mortgage insurance (PMI) with VA mortgages. The home seller is permitted to pay all allowable closing costs.

How many times can I use a VA loan?
There is no limit on the number of times a veteran can use a VA loan; although, the existing VA loan should be paid off before moving onto a new VA mortgage. The reason is due to the entitlement amount (loan guarantee to the lender).

How does a VA loan work?
A VA mortgage is not unlike other mortgages. Applicants must meet income, debt to income ratios and other guidelines. Veterans must prove their VA eligibility with a Certificate of Eligibility. The COE is provided by the Veteran's Administration. The veteran can obtain the COE or approved lenders are able to acquire the certificate.

How much are closing costs on a VA loan?
There are closing costs with a VA home loan. The veteran can expect title insurance, transfer tax and mortgage stamps (if applicable), appraisal, and credit report fees and other fees just like any other mortgage.

How much home can I afford with a VA loan?
The loan amount is determined by the veteran's income, monthly debt, the location of the home, and of course the applicant's credit history.

What are the VA loan limits for 2021?
Technically, there are no loan limits on VA loans, however, thelender may have established loan limits. And, as previously mentioned, the 25% loan guarantee often limits the maximum loan size.

What is a VA home loan?
A VA home loan is a mortgage that are offered to eligible veterans by private lenders; and is backed by the Department of Veterans Affairs.

Who pays closing costs on a VA loan?
The closing costs are typically paid by the veteran, however, the seller is allowed to pay the closing costs on behalf of the veteran.

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