What are VA Loan Requirements?

When it comes to purchasing a home, Veterans Affairs (VA) loans offer one of the most beneficial options for service members, veterans, and their families. VA home loans provide favorable terms and conditions compared to traditional mortgage options, making homeownership more accessible. However, there are specific VA loan requirements that must be met to qualify. In this article, we'll break down the key VA loan requirements to help you understand if you’re eligible and how to proceed with the application process.

VA Loan Eligibility Requirements

Service Requirements: To be eligible for a VA loan, you must meet specific service criteria. Generally, this includes:

Active Duty Service Members: Must have served for at least 90 consecutive days during wartime or 181 days during peacetime.
Veterans: Must have met the required length of service based on the time they served.
National Guard and Reservists: Must have served for at least six years, or 90 days under Title 32 orders, with at least 30 of those days being consecutive.
Surviving Spouses: Spouses of service members who died in the line of duty or as a result of a service-related disability may also be eligible.

Certificate of Eligibility (COE): A VA home loan certificate of eligibility is necessary to prove to lenders that you meet the VA loan requirements for loan benefits. You can obtain your VA home loan certificate of eligibility through the VA's eBenefits portal, by mail, or with the help of a VA-approved lender.

VA Loan Property Requirements

The property you intend to purchase with a VA loan must meet certain criteria to ensure it is safe, sound, and sanitary. Key property requirements include:

Primary Residence: The home must be your primary residence. VA home loans cannot be used for investment properties or vacation homes.
VA Appraisal: The property must undergo a VA appraisal to determine its market value and ensure it meets minimum property standards.
Occupancy: You must agree to occupy the home within a reasonable time, typically within 60 days of closing.

VA Loan Credit and Income Requirements

Credit Score: While the VA does not set a minimum credit score, most lenders require a VA home loan requirements credit score of at least 620. Some lenders may be more flexible, especially for borrowers with strong compensating factors.

Debt-to-Income Ratio (DTI): The VA recommends a debt-to-income ratio of 41% or less. This ratio compares your monthly debt payments to your gross monthly income. Lenders will evaluate your DTI to ensure you can comfortably manage your mortgage payments.

Stable Income: Lenders will assess your income stability and employment history. Consistent, reliable income is crucial in proving your ability to repay the loan. This can include income from employment, self-employment, retirement benefits, and other sources.

VA Loan Funding Fee

The VA funding fee helps offset the cost of the loan program to taxpayers. This one-time fee is a percentage of the loan amount and varies based on factors such as:

First-Time Use: Typically, first-time homebuyers will pay a lower funding fee compared to subsequent use of the VA loan entitlement.
Down Payment: The funding fee can be reduced with a larger down payment.
Service Category: Active duty, veterans, National Guard, and Reservists may have different funding fee rates.

Exemptions: Some borrowers are exempt from paying the funding fee, including:

Veterans receiving VA compensation for a service-connected disability.
Service members with a proposed or memorandum rating, before the loan closing date, stating they are eligible to receive compensation for a service-connected disability.
Surviving spouses of veterans who died in service or from a service-connected disability.

VA Loan Limits

As of 2020, there are no longer VA loan limits for eligible veterans with full VA loan entitlement. This means you can borrow as much as your lender is willing to approve without a down payment. However, if you have remaining entitlement or have defaulted on a VA loan, your loan limit will be based on county-specific conforming loan limits.

Conclusion

VA home loans offer an incredible opportunity for service members, veterans, and their families to achieve homeownership with favorable terms. By understanding the VA loan requirements, you can better navigate the application process and take full advantage of the benefits you’ve earned through your service. At Truevana, we specialize in assisting military families with their relocation and home buying needs, ensuring a smooth and stress-free experience. If you’re considering a VA loan, our team of experts is here to help you every step of the way.

For more information on VA loan requirements, VA loan entitlement, and personalized assistance, contact Truevana today. We're dedicated to serving those who have served our country, making your military move and journey to homeownership as seamless as possible.