Whether you want a VA backed mortgage or VA direct loan, you must first meet the requirements. VA home loans are designed for veterans and their families. Therefore, the VA sets certain military service requirements for prospective borrowers.
To qualify for any type of VA loan, all applicants must prove their eligibility by obtaining a Certificate of Eligibility (COE). This document contains information about the veteran’s military service and is used by mortgage lenders to verify that he or she meets the VA’s military qualifications.
Veterans applying for VA home loans must generally have served on active duty for a specific period of time. The active-duty service requirement varies depending on a few factors, such as:
- Branch of service
- Dates of service
- History of service-connected disability
You cannot get a VA loan if you were dishonorably discharged from the military.
Surviving spouses of military members and veterans may also qualify for VA home loans if they qualify for a COE. Generally, surviving spouses qualify for VA benefits if the military member:
- Is missing in action (MIA)
- Is a prisoner of war (POW)
- Died on duty or from a service-connected disability and the spouse did not remarry
- Had a service-connected disability and then died, but the disability may not have been the cause of death (in certain situations)
Even if you meet the service requirements listed above, you must also meet the requirements for the specific type of loan you want to secure.
When you apply for a VA backed mortgage, for example, you are agreeing to use the loan for the specified purpose.
A purchase loan can be used for any of the following reasons:
- Buy a single-family home
- Buy a multi-family home, up to four units
- Buy a condo in a VA-approved condominium complex
- Buy a home and make renovations
- Buy a manufactured home or lot
- Build a new home
- Make changes to make a home more energy efficient
A cash-out refinance VA loan has two purposes. You can use it to convert your home’s equity (the difference between its value and what you still owe) to cash, or you can use it to change a non-VA loan into a VA backed loan.
To get an interest rate reduction refinance loan (IRRRL), you must already have a VA-backed mortgage that you wish to refinance. VA refinance rates vary based on the mortgage lender, but are generally better than other types of home loans.
To qualify for the Native American Direct Loan (NADL), you must meet the VA’s service requirements (as verified through a COE) and:
- Be Native American or be married to a Native American
- Be a member of a tribe that has a Memorandum of Understanding (MOU) with the VA
- Plan to live in the home financed with a NADL
Ready to apply for a VA backed mortgage or other type of VA home loan? Continue reading the next slide to learn more about the application process and things that mortgage lenders look for.