Are You Eligible For A VA Home Loan?The first step toward owning a home purchased with a VA mortgage loan is establishing your eligibility for the loan. VA loans are for eligible veterans (and eligible surviving spouses of military members) who have served a minimum time in uniform. This minimum can vary depending on the nature of your service and when you joined.
The VA Lender’s Handbook has a list of rules that establish eligibility for borrowers. According to Chapter Two of the handbook, “Eligibility means the veteran meets the basic criteria of appropriate length and character of service to utilize the home loan benefit.”
Once eligibility is established, there’s another factor you should know about–VA loan entitlement, described by the VA Lender’s Handbook as, “the amount a veteran may have available for a guaranty on a loan.” How much is that basic entitlement? From Chapter Two:
“The amount of available basic entitlement is $36,000. This may be reduced if a veteran has used entitlement before which has not been restored.”
If you have never used VA home loan benefits before, you’ll be eligible for 100% of your entitlement, but some borrowers might assume that because they are eligible to apply for a loan at 100% entitlement, that the loan will automatically be approved.
“An eligible veteran must still meet credit and income standards in order to qualify for a VA-guaranteed loan”. That’s another line from Chapter Two, which also includes the following advice to the lender, stating, “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.”
The lender can help you apply for a VA Certificate of Eligibility which allows you to move forward with the VA home loan. The certificate also explains the borrower’s basic entitlement for the loan, and gives information about the VA loan funding fee. Speak to your loan officer about eligibility if you need help applying for your certificate.
Do you have questions about VA home loans? Ask us in the comments section.