VA Loan Myths: All Veterans Are Entitled to a VA Home Loan
There are many benefits and entitlements that come with military service. Veterans have a wide range of programs, services, discounts and benefits including the VA loan program. But just because someone joins the military and volunteers to serve their country doesn’t mean they are automatically entitled to be approved for a VA home loan.
That idea is one of the basic myths about VA loans. There are many factors that lead to the approval of a VA home loan, from both the VA perspective and that of the lender. Before a VA loan applicant can even get to the paperwork stage, they must first meet VA criteria for eligibility.
All VA borrowers must spend a minimum of time on active duty or as a member of the National Guard/Reserves before they are eligible to apply. The minimum on-duty time varies based on the nature of service and when the military member signed up; the VA offers complete information on this subject to help borrowers determine their eligibility.
The VA borrower must submit a request for VA loan eligibility to the Department of Veterans Affairs. Once this request is approved the borrower can start the application paperwork for a VA home loan. It’s important for the borrower to know that the VA sends back a certificate of eligibility, not “loan approval”. The VA paperwork simply declares the veteran has served long enough to be eligible to apply and how much VA loan entitlement the veteran has available.
It’s the lender’s job to make sure the borrower is credit-worthy and offer terms. If the borrower can’t demonstrate they are a good credit risk, the lender can turn down the applicant for a VA home loan. The Department of Veterans Affairs reminds borrowers that no lender is required to issue a VA mortgage loan. Unqualified borrowers will not get VA loans, even if they are eligible to get them based on the length and character of their military service.
The VA loan is a benefit every eligible service member has access to, but it is not guaranteed. It’s easy to confuse the VA loan system with the GI Bill system, where every eligible veteran DOES have the right to get money to pay for school at an approved institution. But the nature of the GI Bill is completely different than a VA home loan; each program has different federal laws that govern it.
The good news is that vets who don’t qualify today for a VA home loan may be able to qualify in the future if they are proactive about fixing the issues that keep them from being approved for a government home loan. Getting help from a credit counselor is an excellent first step for those who feel they may not qualify based on past mistakes or problems.