How to Qualify for a VA Loan

VA loans offer great benefits like zero down payment, lower rates, and no PMI. You must meet specific service qualifications and financial requirements to qualify. If you’re wanting to check your eligibility, you’ve come to the right place.
Advertising Disclosure.

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone. This article may contain links from our advertisers. For more information, please see our Advertising Policy.

The Military Wallet has partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers. Some or all of the card offers that appear on The Military Wallet are from advertisers. Compensation may impact how and where card products appear, but does not affect our editors’ opinions or evaluations. The Military Wallet does not include all card companies or all available card offers.

va loan eligibility

A VA loan is a mortgage program offered by the U.S. Department of Veterans Affairs (VA) to eligible Veterans and military service members. VA loans make it easier for current and former military members to buy safe and adequate housing by offering exclusive benefits, including:

  • No down payment requirement
  • Lower interest rates than conventional loans
  • No private mortgage insurance (PMI)
  • More flexible credit score and income requirements
  • Assistance with loan modification and foreclosure avoidance

Today we’ll review the eligibility terms set by the VA and financing requirements set by lenders and get you one step closer to that dream of home ownership.

Who is Eligible for a VA Loan?

To qualify for a VA loan, you must meet specific service requirements. Generally speaking, VA loans are available to:

  1. Veterans who have served 90 consecutive days of active duty during wartime or 181 days during peacetime with acceptable discharge conditions.
  2. Active-duty service members who have served 90 consecutive days with acceptable discharge conditions.
  3. National Guard and Reserve members who have served at least 6 years or served 90 days (at least 30 consecutive days) under Title 32 orders.
  4. Surviving spouses of a Veteran who died in the line of duty or due to a service-related disability.

A Certificate of Eligibility, or COE, is a document that proves your eligibility for the VA home loan benefit. The COE shows that you meet the minimum service requirements and have enough entitlement to obtain a VA loan.

The COE also includes your entitlement code, which tells the lender how much loan entitlement you have available. VA entitlement refers to the dollar amount the VA will guarantee on a VA loan, which represents the portion of the loan that the VA will repay the lender if the borrower defaults on their loan.

The requirements to obtain your COE vary depending on your service status. You can get your COE by applying through your lender, applying online through the VA’s eBenefits portal, or applying by mail.

VA Loan Financing Rules

VA loan lenders set financing requirements to ensure you can comfortably meet your mortgage payments. Lender requirements typically vary, but we’ll go over the commonly accepted indicators, including credit score minimums, a minimum debt-to-income ratio, and employment requirements. This information helps lenders determine how much loan you can afford and your monthly payment terms.

Minimum Credit Score

There is no official minimum credit score required to get a VA loan. However, the majority of lenders won’t accept a score below 620. Usually, a lender will pull your credit score from Equifax, TransUnion, and Experian, then take your median credit score to use for your application.

A score below 620 doesn’t automatically disqualify you. Lenders will consider other factors, such as your most recent credit history. For example, if you’ve been making payments on time for two years and your lower credit score results from decisions you made five years ago, you’ll be in better shape than someone with a low rating because of recent problems.

Debt to Income Ratio

The VA does not set a maximum debt-to-income (DTI) ratio for VA loans, but most lenders prefer 41% or less. The DTI ratio measures your monthly debt payments divided by your gross income, indicating your ability to handle new debt. Lenders prefer a lower DTI ratio as it suggests better capacity for financial obligations like a mortgage.

While most lenders like to see a maximum DTI ratio of 41%, they may be willing to make exceptions for borrowers with solid credit scores or other compensating factors, such as a large down payment or significant cash reserves.

Here’s how to calculate your debt-to-income ratio:

  1. Determine your monthly income, including wages, tips, investments, commissions and child support (use your gross or pre-taxed income).
  2. Add up your debts, including car payments, student loan payments, loans you’ve co-signed, credit card minimum payments, child support payments and mortgage payments, including your new mortgage.
  3. Divide your debt by your income and multiply that number by 100.

Let’s try out an example: $2,000 a month in debt (divided by) $4,500 a month in income (equals) .44. Multiply .44 by 100, which shows a debt-to-income ratio of 44%.

Employment Requirements

VA loan employment requirements refer to the guidelines lenders use to evaluate a borrower’s employment history and stability when considering them for a VA loan.

In general, lenders prefer borrowers with a stable and consistent employment history and a steady income track record. This typically means having at least two years of continuous employment with the same employer or in the same line of work. However, there are some exceptions to this rule. For example, if you are a recent college graduate who has only briefly worked in your field but has a strong employment history before, lenders may still consider you for a VA loan.

Lenders may also consider other employment-related factors, such as the borrower’s occupation, income stability and future earning potential. They may also look at whether the borrower has a history of job hopping or gaps in employment, which could indicate a higher risk of default.

Lenders may require additional documentation, such as tax returns and profit and loss statements, to verify your income and employment stability if you’re self-employed.

General VA Loan Rules

VA Funding Fee

The VA funding fee is a one-time fee charged by the Department of Veterans Affairs (VA) to help offset the costs of the VA loan program. The VA funding fee serves two main purposes: to assist in funding the VA loan program and to function like Private Mortgage Insurance (PMI), which is not mandatory for VA loans.

The funding fee ranges from 0.5% – 3.3% depending on your loan terms. You may be exempt from paying the funding fee if you:

  • receive compensation for a service-connected disability
  • receive Dependency and Indemnity Compensation (DIC) as the surviving spouse of a Veteran
  • are a Purple Heart recipient

VA Occupancy Rules

VA loans are intended for owner-occupied properties, meaning the borrower must intend to live in the property as their primary residence. The borrower is generally required to move into the property within 60 days of closing on the loan.

VA Loan Limits

A VA loan limit is the maximum loan amount available to borrowers with only partial entitlement remaining. VA loan limits vary depending on the borrower’s county, so make sure to check where your property is located.

Equal Housing Opportunity

Equal housing opportunity. The Department of Veterans Affairs affirmatively administers the VA Home Loan Program by assuring that all veterans are given an equal opportunity to buy homes with VA assistance. Federal law requires all VA Home Loan Program participants — builders, brokers and lenders offering housing for sale with VA financing — must comply with fair housing laws and may not discriminate based on the race, color, religion, sex, handicap, familial status or national origin of the veteran.


About Post Author

Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

Reader Interactions

Comments

    Leave A Comment:

    Comments:

    About the comments on this site:

    These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

  1. Shannon J Chaney says

    I’m curious about my eligibility. I have my DD214 and was honorably discharged. Is there a number to someone in Memphis, TN that could review my form and let me know what all I am eligible for and to discuss options that are available to me.

    • Ryan Guina says

      Hello Shannon, Thank you for your question. You are most likely eligible if you have a DD 214 and an honorable discharge. You would need to apply for a Certificate of Eligibility from the VA. This is free and easy to do. Also, many lenders will help with this process.

      As far as specific lenders, you can use a local company or a company that specializes in VA Loans. Sometimes using a company that specializes in VA Loans can make the process faster and easier, since they are familiar with the process. Here are some recommended VA Lenders.

      I wish you the best, and thank you for your service!

The Military Wallet is a property of Three Creeks Media. Neither The Military Wallet nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. of Veterans Affairs, the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at va.gov. The content offered on The Military Wallet is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.

Advertising Notice: The Military Wallet and Three Creeks Media, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet; For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked and this compensation may affect how, where and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings or lists are fully comprehensive and do not include all companies or available products.

Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of  The Military Wallet.