A Veterans Affairs loan (VA loan) is a loan option that is designed especially for veterans and active service members who are interested in purchasing a house. Aptly named, VA loans are backed by the U.S. Department of Veteran Affairs. They have fewer requirements and are therefore easier to obtain for those who qualify for them. But how do you know if you are eligible for a VA loan?
Apply for a certificate of eligibility
A few of the advantages that VA loans bring include:
- No down payment.
- No private mortgage insurance required.
- Lower interest rates.
- Easier to qualify for than most other loans.
As a veteran or an active service member that has more than six months of service under your belt, you are already well on your way to qualifying for a VA loan. However, you will need to get a certificate of eligibility(COE) to ensure qualification. There are a few notable exceptions to the six-month rule. If you are a member of the National Guard or are in the Army reserve, there is a six-year wait period. Keep in mind that if you were to get pulled into active duty before that time period is up, you will automatically be eligible after 181 continuous days of active service.
In addition to being a service member, widows and widowers of those who passed away in the line of duty may be eligible as well. This exception extends to spouses of those who are married to a member of the military who lost their life as a result of a service-related disability. Now that you know whether you should apply to receive a certificate of eligibility, it's time to move onto the next step.
Meet lender requirements
It's important to note that qualifying for a certificate of eligibility does not guarantee that you will receive a VA loan. With COE in hand, you will start the mortgage process and see if you meet the lender requirements. Here are a few of the things that will be considered:
- Income verification.
- Credit score.
- Debt-to-income ratio.
If you are feeling overwhelmed, qualifying for a VA loan is easier than you might think. In 2020 alone, the U.S. Department of Veterans Affairs guaranteed 1.2 million home loans, worth about $363 billion.
Important to know
There are a few things to keep in mind before and while you apply for a VA loan. The loan is only available for primary residences. It cannot be used for any kind of investment properties. If you think that you qualify for a VA loan but have already gone with another loan option, you can refinance to a VA loan.
Reach out to a professional at The Federal Savings Bank to learn more about how to qualify for a VA loan.
Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.