Understand the Qualifications for Veterans, Active-Duty Service Members, and Military Spouses to Secure a VA Home Loan.
Eligibility for a VA loan is primarily based on your military service. The following categories generally qualify:
Active-Duty Service Members: You must have served at least 90 consecutive days during wartime or 181 days during peacetime.
Veterans: Veterans must meet the service requirements mentioned above. For those who served in the Reserves or National Guard, at least 6 years of service is typically required, unless they were called to active duty.
National Guard and Reserves: As mentioned, those who served 6 years in the National Guard or Reserves, or 90 consecutive days of active duty during wartime, are eligible.
Surviving Spouses: Spouses of service members who died in the line of duty or from a service-related disability may also qualify for VA loan benefits, provided they haven’t remarried.
To apply for a VA loan, you will need a Certificate of Eligibility (COE). This document verifies to lenders that you meet the VA’s service requirements. You can obtain a COE through the VA’s eBenefits portal, by working with an approved VA lender, or by submitting a form to the VA directly.
While the VA does not set a specific credit score minimum, most VA-approved lenders typically look for a credit score of 620 or higher. Even if you have a lower score, VA loans are more forgiving in comparison to conventional loans, so you may still qualify with compensating factors such as a solid employment history or a larger down payment.
In addition to your credit score, lenders will evaluate your debt-to-income (DTI) ratio, which is the percentage of your gross monthly income that goes toward paying debts. Most lenders prefer a DTI ratio of 41% or lower, but VA loans tend to be flexible with this requirement as well.
To qualify for a VA loan, you must have a steady and reliable income. Lenders will assess your income to ensure you can afford the mortgage payments. The VA requires lenders to consider what is known as residual income, or the amount of money left after covering monthly expenses. This ensures that veterans have enough disposable income to cover basic living expenses after paying their mortgage.
Finally, the home you’re purchasing must meet certain property requirements set by the VA. These requirements ensure that the property is safe, sanitary, and structurally sound. The VA will require an appraisal, and if the property doesn’t meet their standards, you may need to address any issues before the loan is approved.