How to Qualify for a VA Loan

A VA Loan is a mortgage insured against default by the United States Department of Veterans Affairs. The program assists our most deserving citizens to get home financing at competitive interest rates, while requiring no down payment or private mortgage insurance (PMI).

VA home loans can be used to:

Buy a home
Build a home
Simultaneously purchase and improve a home
Improve a home by installing energy-related features or making energy efficient improvements
Buy a manufactured home and/or lot
To refinance an existing VA-guaranteed or direct loan to lower the interest rate
To refinance an existing mortgage loan or other indebtedness secured by a lien a residence occupied by the veteran as a home

Your length of service or service commitment, duty status, and character of service determine your eligibility for specific home loan benefits (see applicable eligibility requirements). VA-guaranteed loans are eligible for a home for your occupancy or a spouse and/or dependent (for active-duty service members). To be eligible, you must have satisfactory credit and income to meet the expected monthly obligations and a valid Certificate of Eligibility (COE).

Eligibility Requirements

Veteran & Current or former National Guard or Reserve member who has been activated Federal active service - requires a copy of a DD Form 214 showing the character of service and the narrative reason for separation.
Active Duty Servicemember or Current National Guard or Reserve member who has never been in Federal active service- A current statement of service signed by (or by the direction of) the adjutant, personnel office, or commander of the unit or higher headquarters. Must show your full name, social security number, date of birth, entry date on active duty the duration of any lost time and the name of the command providing the information.
Discharged member of the National Guard who has never been activated for Federal active service - NGB Form 22, Report of Separation and Record of Service, for each period of National Guard Service -AND- NGB Form 23, Retirement Points Accounting, and proof of the character of service.
Discharged member of the Selected Reserve who has never been activated for Federal active service - a copy of your latest annual retirement points statement and evidence of honorable service.
Surviving Spouse in Receipt of DIC (Dependency & Indemnity Compensation) benefits - Submit VA Form 26-1817 and veteran’s DD 214 (if available). Include the veteran’s and surviving spouse’s social security number on the 26-1817 form.
Surviving Spouse not receiving DIC benefits - submit the following to the appropriate Compensation and Pension office; VA Form 21P-534-ARE, DD 214 (if available), Marriage License, Death Certificate or DD Form 1300 - Report of Casualty. Find the mailing address for your state to send the VA 21-534 at PMC States.

Applying for a Certificate of Eligibility

After gathering all the necessary documentation, you can apply for a Certificate of Eligibility (COE) a number of different ways:

Servicemembers, Veterans, and National Guard and Reserve Members
- Apply online with the eBenefit portal.
- Apply through your lender. Most lenders have access to the system, an Internet-based application can establish eligibility and issue a COE. Not all cases can be processed this way, the VA must have sufficient data on record.
- Apply by Mail. Use VA form 26-1817, Request for Certification of Eligibility.
Surviving Spouses
- Take a VA Form 26-1817 to the lender for processing or mail the 26-1817 and the DD 214 (if available) to the designated address.

Loan Criteria

Perhaps the greatest advantage of VA home financing is the ability to avoid mortgage insurance while requiring no down payment at the same time. In fact, loans can be granted up to 103.3% Loan to Value (LTV is the lessor of the sales price/ appraised value divided by the loan amount expressed as a percentage), meaning that borrowers can borrow over 100% of the value of their home.

Though VA loans do not require mortgage insurance, they carry a funding fee of 3.3% of the loan amount. The fee is financeable at a borrower’s request, which is the purpose of allowing eligible veterans to borrow 3.3% more than their home’s value. Disabled veterans are exempt from the funding fee based on their percentage of disability.

Remember, with all mortgages, there are closing costs to consider aside from your down payment, like origination fees, title fees, escrow deposits, etc. Unless covered using existing equity or by seller concessions, these costs will have to be paid by borrowers at the closing table.

Required Documentation

Income documentation: W2s & pay stubs (if hourly/ salary), 2 years tax returns (if commission/ self-employed)
Asset documentation (itemized statements for savings, checking, or investment accounts)
Property sales contract
DD214 or Certification of Guarantee
Certificate of Eligibility