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What Are the Requirements for A VA Loan?

July 6, 2022
Written by Brandon Crysler
Table of Contents

Around 23% of people purchase homes with cash, but the other 77% of home sales require mortgage loans. A mortgage loan offers a long-term repayment plan, making it easier for a person to afford a home. 

Mortgages come in all shapes and sizes, but each type has requirements the borrower must meet to qualify for the loan. Do you need a loan? If so, do you have any military experience in the books? 

You can apply for a VA loan if you do. However, you might want to research the requirements for a VA loan before applying to make sure you meet them.

If you’re unsure what they are, keep reading this guide as we explain the requirements needed to qualify for a VA loan. 

VA Loan Basics

Before understanding the VA loan requirements, you might benefit by learning a few basic facts about VA loans. 

First, the Department of Veteran Affairs is the entity that sponsors (backs) VA loans.

The VA developed these loans to help veterans become homeowners. Therefore, they’re only available to people with military experience.

This program began in 1944 but has expanded over the years. More than 25 million veterans have benefited from this program over the years, and many will continue to benefit in the future. 

VA loans offer competitive rates but have eased requirements, making it easier for vets to qualify for mortgages. 

Requirements for a VA Loan

You must meet the requirements for VA loans to get one. Here are the primary things a lender looks for when a person applies for a VA loan:

Certificate of Eligibility (COE)

One of the main eligibility requirements for VA loans is the COE. The COE is a certificate that proves you meet the VA’s standards for VA loans. You won’t qualify for a VA loan without a COE.

So, how do you get one? You must apply with the Department of Veterans Affairs to get one. When they evaluate your application, they’ll determine if you served the appropriate time in the military. If so, they’ll give you a COE.

There are several ways to qualify for a COE. One option is by serving 90 consecutive days in a war. Another option is by serving 24 consecutive months in active military duty. 

Credit Score

The VA doesn’t set credit score requirements for approvals. Instead, they let the lenders set their score requirements. As a result, every lender that issues them sets credit score rules. 

Most lenders have lenient credit score rules. If you compare the requirements, you’ll likely notice that a score of 620 is average. Therefore, you meet this requirement if your score is at least 620. 

Down Payment

One of the best parts of a VA loan is the down payment requirements. You don’t need any money down to get a VA loan. However, you must pay a one-time funding fee.

Lenders determine the fee rate by your down payment amount. If you want to pay a lower funding fee, you need to put more money down. The funding fee rate is the highest when you put no money down. 

The current rate for a no-money-down VA loan is between 2.3% to 3.6%. On the flip side, you’ll pay 1.4% if you put at least 10% of the home’s purchase price as your down payment. 

Debt-to-Income (DTI) Ratio

The DTI is a ratio that lenders use to see if a person can afford to repay a loan if approved. Lenders compare the person’s income to debts to determine the answer. 

Lenders generally set their DTI ratios themselves, so they vary. You should have no trouble qualifying for a VA loan if you have a steady job with enough income to cover your bills and a mortgage.

Benefits of VA Loans 

Next, you might wonder about the benefits these loans offer to borrowers, and there are many.

First, they offer competitive interest rates. The rates you get through VA loans are comparable to the rates of other loan types.

Next, you can choose from various durations, allowing you to customize your loan. For example, you can choose a 30-year loan if you need 30 years to repay it, but you can also choose a 15-year loan if you prefer.

Additionally, you won’t pay private mortgage insurance with a VA loan. You must pay a one-time funding fee when the lender originates the loan, but you won’t have ongoing fees to pay throughout your loan duration. 

One final note about the benefits is that you can get a VA loan a second or third time. So, for example, if you had a VA loan in the past, you’re not disqualified from getting another one. Instead, they’re reusable. 

Where to Get a VA Loan

Learning the requirements for VA loans can help you determine if this is the right mortgage type for you. If you believe you meet the VA loans requirements, you can contact a lender that offers them.

Some mortgage lenders don’t specialize in VA loans, while others do. It’s important to know that the VA doesn’t issue these loans. Instead, they back them while mortgage lenders issue them.

When you’re ready to get one, you can contact a lender, such as Southern Home Team. They’ll ask you to fill out an application and assist you with the other steps required in the loan application process. 

Learn More

You can determine if you meet the requirements for a VA loan before applying. Additionally, you can talk to a lender to learn more. VA loans are ideal for anyone who meets the requirements, as they offer numerous benefits.

Are you ready to learn more about VA loans? Contact Southern Home Team if you’d like more information.

We offer VA loans and other loan types and can help you find the right mortgage. You can also apply for a loan online or call us if you have questions. 

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