The VA home loan program is a mortgage program specifically catered to our nation’s veterans and service members; and the best part is, almost every veteran and active-duty service member is eligible!

Due to the many benefits, including the ability to purchase a home with no money down, flexible credit and income requirements, low interest rates, and no private mortgage insurance, service members and their families cite the program as the simplest and most cost effective path to homeownership.

A veteran’s service requirement is the first step in VA home loan eligibility. To be eligible, a veteran or service member must first fall under one of the following categories:

  • Served on active-duty during wartime for 90 day or during peacetime for 181 days
  • Served in the National Guard or Reserves for at least six years
  • Be the spouse, not remarried, of a soldier who died due to a service related injury

The next step is to secure your Certificate of Eligibility, which can be acquired from a VA-approved lender or through contacting the Department of Veteran Affairs.

Many veterans in the market to purchase a home have never used the program and will have questions on how the program works. To help clear up any questions, here is a list of frequently asked questions on the VA home loan program:

What are the credit and income requirements?

The VA does not give credit or income requirements for the program; however, most lenders require a credit score of at least 620 and a debt-to-income ratio that doesn’t exceed 41 percent.

How much can I borrow?

The loan limit in most counties is set at $417,000; however, in some high cost counties, potential borrowers can receive loans up to $1 million.

What is a Certificate of Eligibility?

The Certificate of Eligibility (COE) is a formal document that certifies what entitlement, if any, a military member has for a VA home loan. Without a COE, a veteran cannot complete the VA home loan process. COEs can be acquired through the Department of Veterans Affairs or through a VA-approved lender.

How is this program self-sustaining?

The VA loan program is self-sustaining through the VA funding fee. The VA funding fee is a one-time fee that can be rolled into your mortgage, and gives the VA the ability to guarantee up to 25 percent of each loan.

What is the difference between eligibility and prequalification?

Even if you satisfy all the service requirements, it doesn’t mean you are automatically prequalified. Prequalification is a basic step you can complete online or over the phone with a VA-approved lender. In this step, a VA-approved lender will give you an idea of what you are eligible for and how much purchasing power you have.

Can I use a VA loan for rental or investment property?

The answer to that is no. Only primary residences are considered eligible, as well as VA-approved condos.

Can I borrow extra money for home improvements?

VA borrowers can borrow up to $6,000 to make energy efficient improvements to their home, known as an Energy Efficient Mortgage (EEM). Veterans considering an EEM should consult their lender to be sure a professional firm performs an energy audit.

For more information on the VA home loan program, contact a real estate agent like Alberto Sotomayor or a VA approved lender.

 

Kevin Pearia is a mortgage commentator for Veterans United Home Loans, the nation’s leading dedicated provider of VA home loans.