The Complete Guide
VA Home Loan Requirements
The VA home loan is a powerful benefit earned by members of our nation's military. Backed by the U.S. Department of Veterans Affairs, this loan program has helped millions of Veterans, active-duty service members, and eligible surviving spouses purchase or refinance a home. The program’s signature benefits, which often include no down payment and no private mortgage insurance (PMI), make homeownership more accessible.
So, what does it take to qualify? Securing a VA loan hinges on meeting requirements across four key areas:
- Military Service: You must meet the minimum service requirements set by the VA.
- Certificate of Eligibility (COE): You need to obtain this official document to prove to the lender that you qualify for the VA home loan benefit.
- Lender Qualifications: You must meet the lender's standards for credit and income.
- Property Approval: The home you wish to buy must meet the VA’s Minimum Property Requirements (MPRs).
This guide will walk you through each of these categories, giving you a clear and complete picture of what you need to use your hard-earned home loan benefit.
Who is Eligible for a VA Home Loan?
Eligibility for the VA home loan is primarily determined by your service in the U.S. military. The VA has specific service duration requirements that can vary depending on when and how you served.
Military Service Requirements
You must meet one of the following service criteria to be eligible for a VA home loan, according to the Department of Veterans Affairs:
- Wartime Service: Served 90 consecutive days of active service.
- Peacetime Service: Served 181 days of continuous active service.
- National Guard or Reserves: Served for more than 6 years.
- Current Active-Duty Service Member: Have served for 90 continuous days.
Service-Connected Disability: You were discharged for a service-connected disability, regardless of your time in service.
Eligibility for Spouses
A surviving spouse may also be eligible for a VA home loan benefit. You may be eligible if you are the spouse of a service member who:
- Is missing in action or a prisoner of war (POW).
- Died in service or from a service-connected disability and you have not remarried.
- Died in service or from a service-connected disability and you have not remarried before age 57 or before December 16, 2003.
The Certificate of Eligibility (COE): Your Proof of Service
Once you’ve confirmed you meet the service requirements, the next step is to get your Certificate of Eligibility, or COE.
What is a COE?
A COE is a document from the VA that officially states you are eligible for a VA-backed home loan. It’s a mandatory part of the loan application process because it proves to the mortgage lender that you have met the VA's minimum service qualifications. Your COE also indicates whether you are required to pay the VA funding fee.
How to Get Your COE
There are three primary ways to obtain your Certificate of Eligibility:
- Through a Lender: The vast majority of VA-approved lenders have access to the VA’s online portal. They can often get your COE for you in a matter of minutes using your Social Security number and date of birth. This is the fastest and most common method.
- Online: You can request your COE directly from the VA through their eBenefits portal online. You will need to log in and follow the instructions to request your home loan benefit documentation.
- By Mail: You can also apply by mail by filling out VA Form 26-1880, Request for a Certificate of Eligibility. You will need to mail the completed form along with proof of service to the address listed on the form. This is the slowest method and can take several weeks.
Lender Requirements: Credit and Financial Standards
Meeting the VA’s service requirements is only the first step. Because the VA only guarantees the loan, not issues it, you must also meet the financial standards set by the private bank, credit union, or mortgage lender who will be funding your loan.
VA Loan Credit Score Requirements
A common misconception is that the VA sets a minimum credit score. In reality, the VA does not set a minimum credit score requirement.
However, lenders who finance the loans do have their own credit standards. Lenders look at your credit score to gauge the risk of lending to you.
It’s important to remember that a higher credit score often leads to a lower interest rate, which can save you a significant amount of money over the life of your loan.
Debt-to-Income (DTI) Ratio
Your debt-to-income (DTI) ratio is another critical factor for lenders. It compares your total monthly debt payments (like car loans, student loans, and credit card payments) to your gross monthly income. The Consumer Financial Protection Bureau (CFPB) provides a helpful guide on how to calculate it.
The VA has stated a preferred DTI ratio of 41% or less. However, the VA loan is known for its flexibility. Lenders may approve borrowers with a DTI above 41% if they have strong compensating factors. These can include:
- A higher credit score.
- Significant cash reserves or savings.
- A substantial down payment (even though one isn’t required).
- High residual income.
Residual Income
Residual income is a unique and important part of the VA loan approval process. It is the amount of money you have left over each month after paying your major expenses, including your new mortgage payment, property taxes, other debts, and estimated utility costs.
The VA establishes residual income guidelines that vary by region and family size. The goal is to ensure you have enough money to cover basic living expenses like food, clothing, and transportation. Having strong residual income can be a significant compensating factor that helps you qualify, even with a higher DTI ratio.
VA Loan Property Requirements
The final piece of the puzzle is the property itself. To be financed with a VA loan, a home must be safe, structurally sound, and sanitary. The VA appraisal process ensures this by checking for compliance with Minimum Property Requirements (MPRs).
What Types of Properties Are Eligible?
VA loans can be used to purchase several types of properties, provided they will be your primary residence:
- Single-family homes
- Condominiums in a VA-approved project
- Townhouses
- Multi-unit properties (up to four units, as long as the Veteran occupies one of them)
- New construction homes
Minimum Property Requirements (MPRs)
A VA-approved appraiser will inspect the property to ensure it meets the VA's standards for health and safety. While not a substitute for a full home inspection, the appraisal will flag any issues with MPRs. Common areas of focus include:
- A safe and functional roof.
- Properly working electrical, heating, and plumbing systems.
- Clean, safe drinking water.
- An adequate water heater and sewage disposal system.
- A foundation that is in good condition.
- Easy access to the property year-round.
- No lead-based paint, asbestos, or significant pest damage.
If the appraiser finds issues, they must be repaired before the loan can be approved.
Occupancy Requirements
The VA loan program is designed to help Veterans and service members buy homes they will live in. As such, you must certify that you intend to occupy the property as your primary residence within a reasonable time after closing, typically 60 days.
Understanding the VA Funding Fee
The VA funding fee is a one-time fee paid to the Department of Veterans Affairs. This fee helps cover the costs of the loan program and reduces the burden on taxpayers. The amount you pay depends on your service type, whether it’s your first time using the benefit, and the size of your down payment.
How Much is the Funding Fee?
For purchases and construction loans, the VA funding fee rates are as follows:
For National Guard and Reserve members, the first-time use fee is 2.4% with no down payment.
Most borrowers choose to roll the funding fee into their total loan amount rather than paying it out of pocket at closing.
Who is Exempt from the VA Funding Fee?
Not everyone has to pay the funding fee. You are exempt if you are a Veteran who is:
- Receiving VA compensation for a service-connected disability.
- Entitled to receive compensation for a service-connected disability but are receiving retirement or active-duty pay instead.
- A surviving spouse of a Veteran who died in service or from a service-connected disability.
- An active-duty service member who has been awarded the Purple Heart.
Conclusion
Understanding these requirements is the first step toward achieving your homeownership goals. With its unique advantages and flexible guidelines, the VA loan remains one of the most valuable benefits available to our nation's Veterans. If you are ready to explore your options and see how this program can work for you, the journey to your new home can start today. Find out more about home loan requirements.
Frequently Asked Questions (FAQs)
What will disqualify me from a VA loan?
Several factors could prevent you from getting a VA loan. These include not meeting the military service requirements, having a dishonorable discharge, possessing a credit score that is too low for a lender's guidelines, having a DTI that is too high without compensating factors, or having insufficient income to cover the mortgage payment and living expenses.
Is there a minimum income to get a VA loan?
No, the VA does not set a minimum income requirement. However, you must prove to the lender that you have stable, reliable income that is sufficient to cover your mortgage payments, other monthly debts, and meet the VA’s residual income guidelines for your family size and location.
How many times can I use a VA loan?
You can use your VA loan benefit multiple times throughout your life. When you sell the home and pay off the loan in full, your full entitlement is typically restored. It's even possible to have more than one VA loan at a time using your remaining or "bonus" entitlement.
