09 Mar Why You Might Not Be Eligible for a COE?
Getting your VA Certificate of Eligibility (COE) is a mandatory part of qualifying for a VA home loan. Even though it is not the only requirement, it shows that you are eligible for VA loans and, therefore, its benefits. But why was your VA Certificate of Eligibility denied?
What’s a VA home loan?
A VA home loan is a mortgage guaranteed by the US Department of Veterans Affairs (VA) and available to service members, reservists, veterans, and family members. These loans are provided by VA-approved private lenders and come with many benefits like no downpayment requirement, no PMI requirement, lower interest rates, and flexible guidelines.
Moving on, there can be several reasons why you might not be eligible for a VA home loan COE. Certificate of Eligibility requirements must be met. Read on to find out more.
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What Is the Certificate of Eligibility?
A VA Certificate of Eligibility (COE) is a document you must obtain to move forward with your VA home loan application procedure.
Simply put, the certificate clearly states that you meet the military requirements for qualifying for a VA mortgage. The certificate also states your entitlement (more on that later).
To obtain the COE, you must meet the following military requirements-
Any ONE of the following conditions must be met:
- You are a Veteran or service member who has served at least 90 consecutive days during wartime, OR
- You are a Veteran or service member who has served at least 181 consecutive days during peacetime, OR
- You are a reservist with at least six years of experience, OR
- You are a family member of a Veteran who either went missing in action, was a prisoner of war or died while in the line of duty.
If you can meet any one of the above-stated conditions, you are eligible to apply for a VA COE. However, you must note that COE is not the only requirement to qualify for a VA home loan.
You must also meet property requirements to ensure that the house is safe for living in. In addition to this, you must also meet the lender’s requirements like having a credit score of at least 620, having the proper debt-to-income ratio, and fair credit history.
However, frankly speaking, the credit requirements are not that hard to qualify for. You just need a credit score of 620 to meet the requirements. In fact, some lenders are even willing to provide loans on a credit score of 580.
How Long Does It Take To Get a COE?
Honestly, it all comes down to how you applied for the document. There are three ways through which you can apply for the Certificate of Eligibility:
- Applying online, through VA’s portal. You can click the link here to get started with the applying procedure.
- Applying through the mail by filling out VA form 26- 1880. You can access the form by clicking here.
- Applying through your lender. You can simply ask your lender to get it for you.
How Long Would It Take if I Applied Online?
Applying online is the quickest way to get your Certificate of Eligibility. It would take hardly five minutes to get the certificate online.
All you need to do is click here, log in to your account, go to manage in the navigation tab, and select housing. Then, click on “Certificate of Eligibility for Home Loan” and download it.
However, if you request your COE through the mail, it would take around 4 to 6 weeks to be delivered to your house.
Once approved for a COE, take a look at the document for the VA entitlement codes that apply to you. These will explain how you are eligible for the Certificate of Eligibility.
Related Article: The 9 Best VA Loan Types of Feb, 2022
Reasons You Might Be Denied a COE
Was your VA Certificate of Eligibility denied? There can be several reasons you might be denied a COE. Here are some of them.
Generally, you would need to serve at least 90 consecutive days during wartime and have an honorable discharge. Following are the types of qualifying types of discharge:
- Early out
- Reduction in force
- Convenience of the government
- Discharged for hardship
- Suffering from a service-connected disability
- Condition interfered with duty
If you receive dishonorable discharge records, you will not be eligible for VA COE and, therefore, VA home loans.
Length of Service
As stated above, you would need to serve at least 90 days during wartime or 181 days during peacetime to qualify for VA home loans.
However, if you left the service before serving minimum days due to a service-connected disability, you would still be eligible for VA COE.
You would only be eligible for COE if you are a surviving spouse of a Veteran, did not remarry, and any ONE of the following conditions are met:
- The Veteran died due to a service-connected injury/disability
- Your Veteran went MIA or was a POW for at least 90 days
- The Veteran was continuously disabled and was eligible for VA disability compensation
Related Article: VA Loan Limits by County
What if My Certificate of Eligibility Says $0 Entitlement?
Let’s first take a look at entitlement. When we say that the US Department of Veterans Affairs (VA) backs the loan, we mean that if the borrower defaults in any way to pay back the loan, the department will pay a certain amount to the lender.
This amount is either 25% of the loan amount or $36,000. Moreover, your COE will state, “This Veteran’s remaining entitlement is $36,000.” The VA will pay back $36,000 if you fail to pay back the loan.
However, here’s the catch. You can borrow VA loans anytime, regardless of whether you have borrowed them before. So, the $36,000 would keep reducing as you use your loan benefits.
Once the entitlement reaches $0, or no entitlement, you will be unable to borrow the loan. However, there’s a way to recover the lost entitlement, and here’s how you do it.
You can either sell your property and repay the department in full or repay the total claim the department paid for you.
Related Article: VA Loan Assumption: An Overlooked Benefit
VA Appeals Process for COE
If you were denied Certificate of Eligibility and you still believe that you should be eligible for the document, you can file an appeal by providing a written Notice of Disagreement (NOD) to the Bureau of Veterans Affairs (BVA).
You can file an appeal by filing a supplemental claim. This means that you are putting in new evidence that could help you strengthen your case and make you eligible for the document moving forward.
Higher Level Review
If you disagree with the VA’s decision, you can ask a senior officer to review your application. The officer will then review your application and establish whether the verdict was based on an error or a difference in opinion.
VA Board of Appeals
If you file for a board appeal, a Veteran’s law judge will review your case and make the final verdict.
Related Article: What Is VA Homeowners Insurance, and Do You Need It?
Restoring a Used Certificate of Eligibility
Was your VA Certificate of Eligibility denied? You can restore your entitlement by selling your property and paying the department in full or paying the full claim paid to the VA. This feature can be great, especially if you are looking to borrow a VA home loan again in the future.