How Lenders Establishes Your Eligibility For A VA LoanWhen it’s time to apply for a VA loan, your loan officer has to establish your basic eligibility for the VA loan benefit. The rules on how this is done are found in the VA Lender’s Handbook Chapter Two. Knowing how this process works can make it feel less stressful for a first time borrower–here’s the process.
The VA loan rulebook starts by defining basic VA loan eligibility. It says, “Eligibility means the veteran meets the basic criteria of appropriate length and character of service to utilize the home loan benefit. Entitlement, which will be discussed later, is the amount a veteran may have available for a guaranty on a loan. An eligible veteran must still meet credit and income standards in order to qualify for a VA-guaranteed loan.”
The lender is required to establish your VA loan eligibility before he or she can process the paperwork.
This is a crucial opening step in your journey toward buying a home with your VA loan benefits. Before processing and closing a loan for an applicant, the lender must ensure the applicant is an eligible veteran. Lenders should never close a loan before they establish eligibility, since VA cannot guarantee a loan for an ineligible veteran.
Furthermore, “A Certificate of Eligibility (COE) is the only reliable Proof of Eligibility for the lender, except in the case of an Interest Rate Reduction Refinancing Loan (IRRRL)”.
The COE is something your lender can help you get. Chapter Two says, “In many cases, a COE can be generated in seconds. If not, lenders should select a link to submit an electronic application. This method allows lenders to upload supporting documentation and submit an application electronically to the Eligibility Center.”
Veterans and currently serving military members can also apply for a COE online.
Chapter Two also reminds us that a COE can also be obtained by U.S. mail, but this isn’t the fastest way to get started. “Lenders and veterans can still apply by mail by completing VA Form 26- 1880, Request for a Certificate of Eligibility. However, to ensure quicker responses, it is preferable to apply online. Lenders in particular should use the online application, rather than mail.”
Do you have questions about VA home loans? Ask us in the comments section.