18 Sep VA Loan Eligibility Criteria: 7 Uniformed Services, Spouses & Reserves
Veteran Administration (VA) Home Loans are one of the benefits provided by the VA to help veterans purchase a home more easily. All veterans and surviving spouses are eligible for these loans, making it possible for them to qualify for a low-cost mortgage when purchasing or refinancing despite their credit score.
In this article, we’ll answer all of your questions about VA loan eligibility and the criteria you need to follow to qualify.
VA Loan Eligibility: General Requirements for VA Home Loan Programs
The VA Loan Program is designed for veterans, service members, and surviving spouses. Those who qualify can receive mortgage financing with no down payment and little to no closing costs. However, there are a few conditions and requirements one must meet to qualify.
Are You Eligible for a VA Loan?
VA loans are only available to individuals who meet certain criteria set by the Administration, including:
- You must have served in an active-duty capacity during wartime for at least 90 consecutive days.
- You must have served in an active-duty capacity during peacetime for at least 181 days.
- You could have served in the Reserves or National Guard for at least six years.
- You may not have been dishonorably discharged at any point.
- Your spouse passed away during active duty or as a result of a disability due to service.
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Do Private Lenders Require Any Additional Benefits to Qualify for a VA Loan?
Once the VA has reviewed and scanned the application, it will determine if the applicant is eligible for a VA loan. Depending on the lender, certain specifications and standards may need to be met before issuing a loan of this type, such as a minimum credit score and income.
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Income Requirements for Veterans Home Loans
While there is no minimum income limit for VA mortgages, you need to have a steady flow of income to both sustain monthly and daily expenses and mortgage payments. This income is viewed as a supplementary income or residual income. Residual income includes expenses such as food, clothing, transportation, and other necessities required for living.
The VA requires residual income for VA home loan applicants for both their well-being and to ensure that the loan is low-risk. Studies show that VA home loan borrowers have the lowest foreclosure rate among primary mortgages.
How to Get a VA Loan Certificate of Eligibility and Why
An application for a VA loan does not require a Certificate of Eligibility (COE)—a VA document that details a borrower’s eligibility for VA Loan benefits.
A VA Loan Specialist can help you apply for the Certificate of Eligibility via phone or in person. You can also download the VA Form 261880 from the VA’s website. The form needs to be printed and then emailed to the Department of Veterans Affairs.
VA Loan Certificate of Eligibility: How Long Does It Take?
Depending on a few factors, it can take up to six weeks to receive your COE, such as requesting the document by mail or the length of time since you’ve served. Ask your lender to order your COE instead, especially if they are a VA-approved lender. This will generally result in a quicker turnaround time for your Certificate of Eligibility VA Loan.
VA Loan Eligibility History
Here is a history of VA loan eligibility throughout the decades based on service requirements.
Gulf War Till the Present
Over 650,000 Service members served during Operation Desert Shield and Operation Desert Storm between August 2, 1990, and July 31, 1991. Since the Gulf War period continues to exist, it is still possible to receive VA benefits.
An active duty service member serving between August 2, 1990, and the present day is considered a Gulf War veteran. For example, the Veterans Pension benefit requires service during a wartime period. So, any veteran who served in active military service between August 2, 1990, and the present meets the wartime service requirement.
Peacetime Service in the 1980s
If you are a veteran who served in peacetime during the 1980s, you must fulfill specific requirements (discussed below) to qualify for a VA loan.
The following two requirements must be met in order to qualify for VA home loan benefits:
- The individual must not have been dishonorably discharged.
- The annual household income and individual’s net worth must meet specific limits set by Congress. Net worth includes personal property of the individual and their spouse (besides their house, car, and almost all home furnishings) minus their debts.
In addition, at least one of the following must be true about the person’s service to qualify:
- The person began their duty before September 8, 1980, and served at least 90 days of active duty with a minimum of one day during wartime.
- The person began their active duty as an enlisted individual after September 7, 1980, and served at least 24 months OR the entire period they were called or ordered to active duty (with certain exceptions) with at least one day during wartime.
- The person was an officer, began their active duty after October 16, 1981, and had not previously served on active duty for at least 24 months.
Further, a VA home loan applicant must also meet one of the following criteria:
- The person must be at least 65 years old.
- The person suffers from a permanent or total disability.
- The person is a patient in a nursing home for long-term care due to a disability.
- The person is getting Social Security Disability Insurance or Supplemental Security Income.
From War-Time Service
Veterans with war-time service must meet certain requirements to qualify for VA loans. Under the current law, only the following wartime periods are eligible for VA home loan benefits:
- The Mexican Border – May 9, 1916, to April 5, 1917, for Veterans who served in Mexico, on its borders, or in adjacent waters.
- World War I – April 6, 1917, to November 11, 1918.
- World War II – December 7, 1941, to December 31, 1946.
- The Korean Conflict – June 27, 1950, to January 31, 1955.
- The Vietnam War – February 28, 1961, to May 7, 1975, for Veterans who served in the Republic of Vietnam. August 5, 1964, to May 7, 1975, for Veterans who served outside the Republic of Vietnam.
- The Gulf War – August 2, 1990, through a future date to be set by law or presidential proclamation.
From Peacetime Service
- The individual necessarily served 90 consecutive days of active service during wartime.
- The individual necessarily served 181 days of active service during peacetime.
- The individual necessarily provided six years of service in the National Guard or Reserves.
- The individual is the spouse of a service member who died in the line of duty or due to a service-related disability.
A veteran or spouse who meets at least one of the above prerequisites will be eligible for VA home loans under the current rules.
VA Loan Eligibility for Members of the National Guard and Reserves
The National Guard Members and Reservists are also eligible for VA home loans. With this program, millions of individuals have been able to buy homes, and generations of veterans and active duty service members have reached their dream of owning a home.
National Guard and Reserve members should be aware of the following:
- The primary requirement for VA benefits is six years of service within the National Guard. After six years of honorable service, one becomes eligible for VA home loan benefits.
- The government does have a provision to grant home loan eligibility before completing six years in certain specific cases. National Guard and Reserve members called to active duty under Title 10 have been eligible for VA Home Loans for several years as long as they completed 90 days of consecutive service.
- Guardsmen mobilized under Title 32 have not received the same kind of early access to VA loan benefits. There is, however, new legislation in place which has made a significant difference.
The New Expanded VA Loan Eligibility National Guard
The Veteran Health Care and Benefits Improvement Act of 2020 increased eligibility for VA Home Loans for current and former National Guardsmen.
The following changes were seen as a result of this legislation:
- As a result of the new legislation, there is no longer any discrimination between Title 10 and Title 32 service members.
- After serving 90 cumulative days full-time (with 30 consecutive days), Guard members activated under Title 32 orders are eligible for VA loans.
- The National Guard Association of the United States estimates that as many as 50,000 Guardsmen were mobilized during the COVID-19 pandemic. As a result, they may also gain immediate access to the home loan benefit.
This legislative change is also retroactive, meaning that Guard members who served decades ago but met the new Title 32 guidelines can also now be eligible for a VA loan.
VA Loan Documents for Guard and Reserve
The VA loan application process isn’t very different for Guard and Reserve borrowers, but some paperwork and documentation may vary. They, too, have access to the same significant home buying benefits, which have aided millions of service members in purchasing their homes since 1944.
All prospective homebuyers must speak with a Veterans United Loan Specialist about their eligibility for the VA loan program. Remember, you will not need a COE in hand to start the VA mortgage process.
An NGB-22 form may be required for Guardsmen, while Reserves may need a points statement and discharge statement to prove their service status.
The lender could ask for the following documents depending on your service.
- National Guard – NGB-22 or NGB-23
- Army Reserve – DARP Form FM 249-2E or ARPC Form 606-E
- Navy Reserve – NRPC 1070-124
- Air Force Reserve – AF 526
- Marine Corps Reserve – NAVMC HQ509 or NAVMC 798
- Coast Guard Reserve – CG 4174 or 4175
Counting Guard and Reserve Income
The National Guard and Reserve also include their service income as effective income towards their mortgage qualifications. Just as with all other forms of income, the stability and reliability of such income are of high importance.
Typically, lenders look at the history of service and the likelihood that the individual’s income will continue. If stability is a concern, the lenders may use such income to offset any short-term obligations. In other words, the service income could mainly be used to cancel out other expenses expected to last for a year or more.
Lends may also look into any anticipated changes in income, based upon whether the person’s unit is active or not.
VA Loan Eligibility for Surviving Spouses
VA Home Loan eligibility as a surviving spouse of a Veteran requires a Certificate of Eligibility (COE), which gives the lender assurance that the applicant qualifies for the benefits.
If you are the spouse of a Veteran and also meet at least one of the following criteria, then you are eligible for a COE:
- The veteran in question must be missing in action.
- The veteran in question must be a Prisoner of War (PoW).
Other VA Home Loan Eligibility Requirements
Once all the other requirements outlined above have been verified, there are some additional requirements to qualify for a VA home loan. In addition to checking the buyer’s income, assets, and credit report, it is important to check the property they are purchasing.
VA Home loans can also be used for condos and manufactured homes; however, not all lenders will finance these kinds of loans. For example, if an individual applies for a loan through a top VA mortgage lender, they may be eligible for getting a VA loan for a condo but not for a manufactured home.
Within 60 days of purchasing the property, the buyer must make it their primary residence. You cannot use a VA loan for a vacation home or an investment property. However, an individual may use it to purchase a one-to-four family home if the eligible member uses it as their primary residence.
While the VA does not require a minimum credit score for VA home loans, the lender may impose certain credit requirements. For instance, the minimum median credit score for a VA loan is usually around 580.
Most lenders will calculate the debt-to-income ratio (DTI) when considering the borrower’s ability to repay the loan. The borrower’s DTI represents how much of their monthly income can be used to make their monthly mortgage payment. The VA does not set limits on anyone’s DTI, even if other lenders insist on it.
VA Loan Limit
The VA does not cap individuals in terms of how much they can borrow. However, there is a cap on the VA’s guarantee—how much money they will buy back if the borrower defaults on the loan. As per the VA, the loan limit for a no-down-payment VA loan is $548,250 in most parts of the country.
While some high cost of living areas may have higher loan limits, there are provisions for this as well. For applicants who require a loan higher than the loan limit, VA jumbo loans are offered, which do not require a down payment and may offer lower interest rates than regular jumbo loans.
Down Payment And Assets
Although VA loans are one of the few home loan options that do not require a down payment, the lender may still impose specific requirements for a no-down-payment VA loan.
For example, they may require that you have a higher credit score (than the median of 580) if you’re putting down less than 10%. You should, however, keep in mind that “no down payment” does not mean “zero cost.”