4 Key Ways To Get Approved For A VA Loan
VA loans (aka Veterans Affairs mortgages) are provided by private lenders and guaranteed by the Department of Veterans Affairs. The VA guarantee is highly regarded by lenders because it means the Department of Veterans Affairs will assume the debt obligation if you (the borrower) default on the loan. VA loans are for service members of the United States military; however, some exceptions do apply. It’s actually fairly easy to get approved for a VA loan, and you won’t soon regret the decision because VA loans often offer better terms than standard mortgage agreements.
1. Income and Credit Eligibility
Like all loans, VA loans require that you meet certain income and credit standards. VA-qualified borrowers must have satisfactory credit, but your credit score isn’t the only determining factor. In fact, there is no minimum score requirement as noted by the U.S. Department of Veterans Affairs Home Loan Guaranty Fact Sheet, but the lender is required to review your entire loan profile before making a lending decision.
VA-approved lenders set their own minimum credit scores, and as previously noted, these scores are typically more lenient. If you have a lower score, but can prove you have sufficient and steady income, you may be approved. It’s at the lender’s discretion, but most lenders approve borrowers who can prove an ability to repay the loan. For VA streamline refinance loans, revenue and credit qualifications may not factor into the lending decision at all.
2. Eligible Property Types
Your ability to acquire a VA loan depends on the type of property you’re looking to mortgage. The Department of Veterans Affairs won’t approve just any house; only owner-occupied properties are eligible for VA financing. This requirement includes single-family homes, VA-approved condominiums and townhomes, and in some circumstances multi-family residences. Although manufactured homes aren’t typically approved, if the manufactured home has a permanent foundation, the lender may consider it; however, not all lenders approve loans for modular housing.
3. Service Member Eligibility
Borrowers are required to obtain a Certificate of Eligibility and then submit it (either in person, by mail, or online). You don’t need this certificate to start the lending process. Your lender will walk you through the steps you need to take in order to acquire it. In some cases, lenders will obtain the document themselves during the initial pre-approval stage.
VA loans aren’t given to just anyone. Only active-duty service members, veterans, reservists, National Guard members, and military personnel qualify. This eligibility does extend to the spouses of veterans, but only if the service member is disabled, dead, POW (prisoner of war), or MIA (missing in action). For the spouse of a disabled or deceased service member to qualify, he or she must not remarry and the service member must have been disabled or deceased while actively serving.
There are also service time requirements. Active service members become eligible after six months of service. Reservists and National Guard members have to wait six years before they’re eligible; however, if they go into active service before then, they become eligible in 181 days. The only exception to that rule is during war time when members of the National Guard, reservists, and active-duty personnel qualify after just 90 days of continuous, active duty. If these members are serving on foreign soil, they’re more likely to be eligible.
4. The Property Must Be Owner-Occupied
VA borrowers are required by law to occupy the houses they mortgage. You must move in within a reasonable period (typically after you close). And, you must remain in the home post sale for at least 60 days. This is not true for service members who are deployed away from home; in that case, the period may be extended up to 12 months. The only relatives who are allowed to occupy the home are the service member’s spouse and children. For VA streamline refinances, the borrower must have lived in the home in the past for a specific amount of time based on the lender’s guidelines.
Even though other eligibility requirements may apply, if these four key loan requirements are met you’re likely to be approved for a VA loan. It’s best to speak with a lender and determine if you meet the minimum qualifications to receive pre-approval. VA home loans have made home ownership a dream-come-true for veterans, active service members, and others who may not have qualified for a traditional mortgage.