Images by GetTyimages. Illustrations by Richard Tran/Bankrate
The U.S. Veterans Affairs Administration (VA) will provide zero-down mortgage access to eligible veterans, service members and surviving spouses. The terminology is generous, but there are requirements that include those set by the VA or those set by individual lenders.
This is what you need to qualify for a VA mortgage.
VA Mortgage Eligibility Requirements
These are the main requirements for obtaining a VA-backed purchase loan.
- You must be entitled to a Certificate of Eligibility (COE) based on your military service record, including:
- Active Duty Service Member I have served at least 90 consecutive days.
- Veterans who meet minimum service requirementsBased on their service days and reasons for discharge. For example, if you serve from August 2, 1990 until the present, you must be working for at least 24 months or at least 90 days of active duty. If you are discharged from the hospital, other time limits will apply.
- Members of the reserve and some of the National Guard. A six-year, non-training active duty service for at least 90 days or six-year membership is a general requirement.
- Eligible Surviving Spouse. For example, if your spouse is missing while acting or dies from a disability related to service, you may be eligible if you did not remarry.
- You need to live in the house you are buying.
- You must meet lender’s underwriting requirements, including credit and income requirements.
As of 2020, VA loans no longer have loan restrictions for fully qualified borrowers. You are fully qualified if:
- This is your first VA home loan.
- I took out my previous VA mortgage, sold the property, and paid off the loan.
- You took out your previous VA mortgage and paid it back after foreclosure or short sale.
While it may still be subject to evaluations or home inspections, these requirements ensure that your home is properly evaluated.
VA Home Loan Qualification
The VA does not significantly regulate the loans it sets back, but lenders who issue VA loans apply their own underwriting criteria. As a result, factors such as the applicant’s credit score, income, and unpaid debt are all commonly committed.
Minimum credit score for VA home loans
VAs do not charge a minimum credit score for VA home loans. Instead, lenders should look at the overall risk profile of the borrower. However, lenders can and can set their own underwriting requirements, many of which require VA borrowers to have a credit score of 620 or higher.
VA Loan Debt Income (DTI) Ratio
Generally, VAs require borrowers to have a ratio of debt income (DTI) of less than 41%. This means that the total of all monthly debt payments must be less than 41% of your monthly income. For example, if you have more tax-exempt income, limited exceptions may be made for those with more debt.
VA Loan Down Payment Requirements
If you want to qualify for a VA loan without paying a down payment, you will need to be fully qualified.
You can take a VA loan without a full eligibility, but you may need to pay a down payment. You may also need to pay a down payment if your home is more than your value.
VA Loan Property Requirements
The VA does not require a home inspection, but you will need to obtain it to check the condition of the property you are purchasing. Your lender may need it too.
The VA requires the property to be evaluated. That’s what most lenders do. That rating allows the VA to let you know that the selling price of a home that is coming soon is not exceeding its value. The assessment also checks that the House meets the VA’s minimum property requirements. For example, the VA requires that the property:
- Access from all-weather surface streets
- Permanently installed heating
- Continuous supply of clean water
- Roof that avoids moisture from the house
In some cases, if you are refinancing your VA, you will also need to get a home rating.
Next steps to applying for a VA loan
Once you know if you qualify for a VA loan, it’s time to start looking for a lender. We recommend comparing at least three lenders to ensure you get the best VA loan rates and terms. Once you find the right lender, you can formally apply for a VA loan.
