Veterans, active-duty service members, and certain surviving spouses may be eligible to buy, build, or repair a home using a Veterans Affairs (VA) loan. If you fall into one of those categories, think you might be eligible, and are interested in buying a home soon, you should make sure you have a clear understanding of the VA purchase loan requirements.
Note that those requirements are at times different from your lender’s requirements. A VA loan, after all, is not issued by the VA. The VA guarantees the loan, and a private lender actually provides it.
A fair rule of thumb is that you will need to first meet the VA’s criteria to be eligible to use the benefits and then meet your lender’s to qualify for the actual loan. In this article, we will explain the requirements for a VA purchase loan as outlined by the VA, as well as some of the guidelines you may come across from private lenders.
VA Loan Purchase Requirements
The VA mandates different things across each stage of the VA loan process. Here, we’ll break down those different pieces.
Who is Eligible for a VA Loan?
Service members can become eligible after serving for 90 continuous days with no breaks. Veterans have different active-duty service requirements depending on when they served. There are eleven periods of service ranging from 1940 to the present day, and you can find the specific requirements for each period on the VA’s website. There, you will also find the distinct requirements for National Guard members, Reserve members, and surviving spouses, too.
Certificate of Eligibility (COE)
The COE is your proof of eligibility for VA loan benefits. You can apply for this on your own, but it is recommended that you work with a VA-approved lender to help you with this step in the process. The requirements vary depending on your service area or relationship with a service member.
Veterans and Activated National Guard or Reserve Members
If you are a veteran or a current or former National Guard or Reserve member who has been activated, you will need your DD Form 214, which must show the character of service and the narrative reason for separation.
Active-Duty Service Members
Active-duty service members will need a current statement of service signed by (or by the direction of) the adjutant, personnel office, or commander of the unit or higher headquarters. This statement must show:
- Your full name
- Social Security Number
- Date of birth
- Entry date on active duty
- The duration of any lost time
- The name of the command providing the information
Never-Activated Current National Guard or Reserve Members
The same requirements as active-duty service members follow for current National Guard or Reserve members who have never been Federal active service, except for two things: The statement must show your entry date on duty and your total number of creditable years of service.
Discharged National Guard or Reserve Members
If you are a discharged member of the National Guard who has never been activated for Federal active service, you will need to provide one of the following:
- NGB Form 22, Report of Separation and Record of Service, for each period of National Guard service
- NGB Form 23, Retirement Points Accounting, and proof of the character of service
If you are a discharged member of the Reserves who has never been activated for Federal active service, you will need a copy of your latest annual retirement points statement and evidence of honorable service.
Surviving Spouses
Eligible surviving spouses who receive Dependency & Indemnity Compensation benefits must submit VA form 26-1817 and the veteran’s DD214 (if available), along with the veteran’s and surviving spouse’s social security number on the 26-1817 form.
Eligible surviving spouses who do not receive those benefits must submit the following to the appropriate Compensation and Pension office:
- VA form 21-534
- DD214 (if available)
- Marriage License
- Death Certificate or DD Form 1300 – Report of Casualty
VA Loan Borrower Requirements
To qualify for a VA purchase loan, you need to be able to get a COE. Then, you must meet the VA’s and your lender’s credit, income, and other requirements. Note that the VA does not have a credit score minimum, but most lenders require at least 620. The VA also generally requires a debt-to-income ratio of 41%. Finally, you must intend to use the home as your primary residence.
VA Loan Property Requirements
The property you purchase with a VA loan must meet the VA’s requirements, too. For example, your VA loan benefits can only be used to purchase certain kinds of homes, including:
- One to four-unit single-family homes
- VA-approved condos
- Certain manufactured homes and their lots
The home you buy (or build) also must meet the VA’s minimum property requirements (MPRs). This is determined during the mandatory appraisal process. Broadly speaking, the VA wants to ensure that veterans are buying homes that are safe, sanitary, and sound. One example of an MPR is that each property must have enough space for living, sleeping, cooking, eating, and sanitary facilities.
VA Loan Lender Requirements
Requirements will vary from one lender to another. However, there are some common things eligible veteran borrowers can usually expect from lenders.
Required Documents
Lenders will typically ask the borrower to provide some of the following documents:
- DD214, Discharge & Separation Documents
- Most recent 30 days of pay history
- Most recent two years tax returns with all schedules
- Most recent two years W2 statements from all employers
- Most recent two monthly asset statements. (Borrower must explain all large deposits and provide the source of the deposit.)
- Credit explanation letters as needed
- All bankruptcy paperwork if applicable
- All divorce settlement paperwork if applicable
- Fully executed Purchase Agreement if a purchase transaction
Is a Down Payment Required?
Typically, a down payment is not required when using your VA loan benefits. However, you can still choose to provide a down payment if you would like to reduce the mandatory VA funding fee or potentially reduce your monthly payments and interest rates.
Final Thoughts
For eligible veterans, active-duty service members, and certain surviving spouses, the VA loan can be a useful tool to help achieve homeownership. If you are considering using your VA loan benefits to purchase a home, it can be helpful to work with a VA approved lender with experience in those loans. They can help you more confidently navigate the VA loan requirements and process.
This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.
