Homebuyers

Everything You Need to Know About VA Home Loans, Part 2

By Courtney Lynch

August 16, 2016

VA loans have several incredible benefits, including no requirements for a down payment or primary mortgage insurance. Before applying for a VA Loan; however, it is vital to confirm your eligibility.

Servicemember VA Home Loan Eligibility

There are a few different ways to be eligible for a VA home loan.

First, you can be a veteran. Depending on the war in which you fought or the period in which you were on active duty, different minimum active-duty service requirements make you eligible for a VA loan. For example, the requirement for those who fought in the Vietnam War is 90 total days. If you were active during the period known as post-Vietnam War (from May 8 1975 to September 7, 1980), your minimum active-duty service requirement is 181 continuous days. Check out this chart to determine whether you are eligible based on when and how long you served.

The second way to be eligible for a VA loan is to currently be on active duty. The minimum requirement for current active duty is 90 continuous days.

The third group of eligible borrowers consists of those in the National Guard or Selected Reserve for at least six years who are now retired, were discharged honorably, continue to serve today, or are now part of an element of the Ready Reserve (other than the Selected Reserve) or Standby Reserve after honorable service.

Under any of these three eligibility conditions, the military member or veteran cannot have been discharged under dishonorable conditions.¹

VA: Gulf War Vets Most Likely to Use VA Home Loan Program https://t.co/4mXa5FQjbd

— Brett Synicky (@BrettSrealtor) May 4, 2016

VA Home Loan Eligibility for Spouses

There are three conditions under which a servicemember's spouse would be eligible for a VA loan without the veteran or servicemember:

The service member is a prisoner of war or missing in action.
The veteran died while in service or from a disability as a result of service, and the spouse has not remarried.
The veteran was disabled and has died, though the disability was not necessarily the cause of death.

Other Ways to Be Eligible

It is possible to be eligible for a VA loan if you have served in organizations like the Air Force, Coast Guard Academy, National Oceanic & Atmospheric Administration, the Department of Public Health Services, and more.

Another way to qualify is by having served in an army that was allied with the U.S. during World War II.

Anyone eligible for a VA loan must obtain a Certificate of Eligibility to present to lenders.

There is also something known as "restoration of entitlement," which allows those who have sold their home that was purchased with a VA loan or paid the loan off in full to qualify for another one. The entitlement for a loan can also be transferred to another eligible borrower.

VA loans close up to two day days quicker than traditional loans.

VA Loan Misconceptions

Sellers can be hesitant about accepting an offer involving a VA loan because they believe they take longer to close. In reality, VA loans close up to two days quicker than traditional loans. Urgency shouldn't be a reason for a seller to turn down a VA-backed offer.

Another misconception is that VA loans don't offer enough financing for ample affordability in many neighborhoods. There are not many neighborhoods for which a VA loan would not be enough.²

In most areas, $417,000 is the VA loan limit, but in higher-cost areas, the limit can increase up to as much as $1,094,625.³

Getting Approved for a VA Loan

Once you've determined that you're eligible for a VA loan and have obtained a Certificate of Eligibility, you still have to qualify. You will, however, have an easier time qualifying for a VA loan than a conventional loan, as lenders' requirements are more flexible because the loans are guaranteed by the U.S. Department of Veterans Affairs.

To qualify for a VA loan, you must intend to live in the property you want to purchase. In general, the borrower must agree to move into the home within 60 days of closing, but these rules are flexible based on whether the borrower is deployed in a location far away from the property. If so, he or she will be able to move in within 12 months of closing, rather than 60 days. In addition, the servicemember's spouse can satisfy the move-in requirements in his or her place.

You must also verify the property you want is eligible to be financed through a VA loan. Fortunately, there is a wide variety of property types a VA loan can finance, like single-family homes, multi-family homes with up to four units per borrower, townhouses, and certain approved condos.

The final qualification requirements are a solid income, a good credit score, and a low debt-to-income ratio. Again, these requirements will be less rigid than for conventional loans and will depend on the lender.⁴

If you are interested in a VA loan, contact New American Funding. Our Loan Officers will help you gather everything you need to apply. We can make sure you obtain the best possible VA loan based on your current personal and financial situation, and we can even help you find a Real Estate Agent. We will take care of the home appraisal utilizing a VA-assigned appraiser, and we don't have to wait for the VA to review your credit application before approving and closing your loan.

Previous: Everything You Need to Know About VA Home Loans, Part 1