Who’s Eligible for a VA Loan?
VA loans are extremely popular, and understandably so. The ability to have a 100% financed home loan is very intriguing.
However, these loans are not available to everyone.
Certain requirements must be met before you can be eligible for a VA loan.
It’s essential that you know these requirements to prevent complications and delays during the application process.
Below are the requirements you should know about before seeking a VA home loan.
Service Requirements
Unfortunately, VA loans aren’t available for all service members. The service requirements for VA Loan eligibility:
- At least 91 Days of Wartime Active Duty Service
- You have 6 Years of Reserves or National Guard Service
- You are the spouse of a service member who was killed in action
- You received an honorable discharge
- You have 181 Days of Peacetime Active Duty Service
If you meet these requirements, you can contact a VA Loan specialist to attain a certificate of eligibility. This will be necessary for your VA Loan Application.
General Information Needed
If you meet the service requirements and received your certificate of eligibility, your next step will be to apply for the VA loan. To speed up the process, make sure you have all your paperwork in order. This is what most lenders will require from you to begin the approval process.
- Residence addresses for the past two years
- Employer Information for the past two years
- Your Gross monthly salary
- Your Social Security Number
- All checking and savings account information
- Account numbers, balances, and monthly payments for any other loans you have open
- Addresses and loan information for any other real estate you own
- Total estimated value of your personal property
- For self-employed individuals, you will need to provide personal tax returns for the past two years, current income statement and balance sheet for the business
- Certificate of Eligibility and DD214, (for veterans only)
- W2′s for the past two years and current check stubs
Income Requirements
Since the goal of VA Loans is to help service members get affordable housing, the income requirements are a bit strict. Lenders want to make sure that you will be able to comfortably afford the house. Some of the things lenders look at to determine if you meet the income requirements:
Residual Income: Residual income is the amount of money you have left over after paying off all of your debts including car payments, utilities, housing expenses, and other bills. The amount of the new mortgage will also be included in this. If it turns out that you have little to no residual income, you may not be approved for a VA Loan.
Debt to Income Ratio: This is one method that’s used in determining conventional loans as well. Lenders will look at the ratio between your total amount of debt (including your mortgage) and your total income. Your debts cannot be more than 41% of your total income. You can figure this amount out ahead of time by dividing your total debts by your income.
Credit: There aren’t any credit requirements set by the VA, however many lenders will look at credit as a factor when approving VA loans. Generally lenders want to see a credit score of at least 630. Keep in mind that this is not a requirement and is just a small piece in the puzzle.
Hopefully you meet these requirements for obtaining a VA loan to take advantages of the great benefits. If you have any questions regarding eligibility consult a VA Loan specialist to clear up any confusion or to guide you in the right direction.
