VA home loans are designed to assist those who have served in the military with the purchase of a home. There are several requirements to qualify for a VA loan, but for those who do qualify, loan terms are often better than either conventional or FHA loans.
Military Service Requirements
In order to apply for a home loan through the VA, you must meet certain requirements in terms of your military service. While the VA will review each application case by case, they do have a set of basic eligibility requirements that serve as a guide.
The applicant must meet one of the following: have served at least 90 consecutive active days during wartime or 181 active days during peacetime, have served six years in the National Guard or Reserves, or be the spouse of a service member who lost their life in the line of duty or because of an injury or disability related to service.
Veterans discharged dishonorably will not qualify for VA home loans.
Income And Employment Requirements
There is no minimum income required to obtain a VA home loan, although the VA does expect applicants to show steady income and reliable employment. The applicant must be able to make the monthly payments on the loan based on current income.
Additionally, the VA requires a certain threshold for residual income. This means that the applicant must be able to make mortgage payments with enough income left over each month to pay for other regular expenses of daily life outside of major bills. This ratio isn’t set in stone, but will be determined on a case-by-case basis.
Credit And Debt Requirements
VA loans are still financed by outside lenders who will have their own eligibility criteria. As a result, during the application process, credit reports will be requested and examined to determine credit history. There is no set credit score requirement with the VA, but private lenders may have a minimum in place.
The applicant’s debt-to-income ratio will also be a major deciding factor in eligibility for a loan. A history of repaying debts on time and avoiding over-use of credit can work in your favor.
The first step to obtaining a VA loan is to apply for a Certificate of Eligibility. While you can start the application process for a VA loan without it, you will be required to obtain it in order to complete the process. This document will ensure that you meet the basic criteria before you go further into the process to determine whether or not you will qualify for a loan based on other factors.