VA Loans
What is a VA loan?
A VA loan is a type of government loan, backed by the Department of Veterans Affairs (VA).
The VA offers specific guarantees to private lenders that handle VA loans. Because of these guarantees, lenders will issue loans to candidates with no down payment or less stringent requirements than other loans.
Note: You may have heard the terms additional entitlement, bonus entitlement, or tier 2 entitlement. We use these terms when we communicate with lenders about VA-backed loans over $144,000. You won’t need to use these terms when applying for a loan.
If you apply and are eligible for a VA-backed home loan, you’ll receive a Certificate of Eligibility (COE). This is the document that tells private lenders (such as banks, credit unions, or mortgage companies) that you have VA home loan eligibility and entitlement. But your lender will still need to approve you for a loan. The lender will determine the size of loan you can afford based on your:
VA Loan Qualification Requirements
Although lenders set their own requirements for certain aspects of qualification, VA loans have more lenient credit requirements than many other mortgage programs.
Not all who have served in the Armed Forces qualify for a VA loan. You must meet at least one of the following criteria to qualify:
- ◉ You’ve served 181 days of active service during peacetime.
- ◉ You’ve served 90 consecutive days of active service during wartime.
- ◉ You’ve served more than 6 years of service with the National Guard or Reserves or 90 days under Title 32 with at least 30 of those days being consecutive.
- ◉ If you’re the spouse of a service member who lost their life in the line of duty or as the result of a service-connected disability. You generally cannot have remarried, although there are exceptions, as well as other requirements for a spouse getting a VA loan.
VA Loan Limits
Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you won’t have to pay a down payment, and we guarantee to your lender that if you default on a loan that’s over $144,000, we’ll pay them up to 25% of the loan amount. You have full entitlement if you meet any of these requirements.
At least one of these must be true:
At least one of these must be true:
- ◉ You’ve never used your home loan benefit, or
- ◉ You’ve paid a previous VA loan in full and sold the property (in this case, you’d have your full entitlement restored), or
- ◉ You’ve used your home loan benefit, but had a foreclosure or compromise claim (also called a short sale) and repaid us in full
Note: You may have heard the terms additional entitlement, bonus entitlement, or tier 2 entitlement. We use these terms when we communicate with lenders about VA-backed loans over $144,000. You won’t need to use these terms when applying for a loan.
Eligibility and Lender Approval
If you apply and are eligible for a VA-backed home loan, you’ll receive a Certificate of Eligibility (COE). This is the document that tells private lenders (such as banks, credit unions, or mortgage companies) that you have VA home loan eligibility and entitlement. But your lender will still need to approve you for a loan. The lender will determine the size of loan you can afford based on your:
- â—‰ Credit history
- â—‰ Income
- â—‰ Assets (items of value such as savings, retirement, and investment accounts)
We don’t require a minimum credit score, but some lenders may have different credit score requirements. Be sure to contact more than one lender to compare.
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