VA Home Loan Requirements

//VA Home Loan Requirements
VA Home Loan Requirements 2017-08-16T16:22:53+00:00

If you’re a veteran looking to buy a home in the Phoenix Valley and you’re wondering about VA home loan requirements, you’ve come to the right place. If you’re an honorably discharged veteran of any branch of the US armed forces – Army, Air Force, Coast Guard, Marines or Navy, active duty, reservist or National Guard – you likely qualify for a VA home loan. Specific eligibility requirements vary depending on your date of entry into service and the terms of your separation from the military.

VA Home Loan Requirements – The Basics

As with any home loan, there are several steps to qualify for a VA home loan. These steps establish eligibility based on these criteria:

  • Eligible Veteran – You must be a veteran deemed eligible for a VA home loan based on your service criteria. See below for eligibility dates and service criteria.
  • Qualified Borrower – The VA is a loan guaranty program, the money is loaned by financial institutions, not the Veterans Administration. Therefore, you must be a qualified borrower who meets the lender’s credit, debt and income requirements.
  • Qualified Property – The property must qualify for a VA home loan and meet the VA’s Minimum Property Requirements. This is determined by an appraisal.

The VA home loan is a great program for buyers who may have had a few past credit difficulties, do not have a well-established credit history, or lack down payment funds. It offers some of the lowest rates available anywhere. However, it’s not for everyone. Your credit history must be “good enough” to qualify, and the VA Minimum Property Requirements entail that, among other things, a property is habitable. If you’re buying a major fixer, have extreme credit difficulties or are unable to demonstrate income, other loan programs may be more suitable. Talk to the Eddie Team to learn more about specific VA home loan requirements.

If you’re a veteran looking to buy a home in the Phoenix Valley and you’re wondering about VA home loan requirements, you’ve come to the right place. If you’re an honorably discharged veteran of any branch of the US armed forces – Army, Air Force, Coast Guard, Marines or Navy, active duty, reservist or National Guard – you likely qualify for a VA home loan. Specific eligibility requirements vary depending on your date of entry into service and the terms of your separation from the military.

VA Home Loan Requirements – The Basics

As with any home loan, there are several steps to qualify for a VA home loan. These steps establish eligibility based on these criteria:

  • Eligible Veteran – You must be a veteran deemed eligible for a VA home loan based on your service criteria. See below for eligibility dates and service criteria.
  • Qualified Borrower – The VA is a loan guaranty program, the money is loaned by financial institutions, not the Veterans Administration. Therefore, you must be a qualified borrower who meets the lender’s credit, debt and income requirements.
  • Qualified Property – The property must qualify for a VA home loan and meet the VA’s Minimum Property Requirements. This is determined by an appraisal.

The VA home loan is a great program for buyers who may have had a few past credit difficulties, do not have a well-established credit history, or lack down payment funds. It offers some of the lowest rates available anywhere. However, it’s not for everyone. Your credit history must be “good enough” to qualify, and the VA Minimum Property Requirements entail that, among other things, a property is habitable. If you’re buying a major fixer, have extreme credit difficulties or are unable to demonstrate income, other loan programs may be more suitable. Talk to the Eddie Team to learn more about specific VA home loan requirements.

Eligibility Dates and Service Criteria

Status Service Era Qualifying Service Dates Minimum Service Criteria
Veteran Post-WWII 7/26/1947 – 6/26/1950 181 continuous days of service
Korean War 6/27/1950 – 1/31/1955 90 total days of service
Post-Korean War 2/1/1955 – 8/4/1964 181 continuous days of service
Vietnam War 8/5/1964 – 5/7/75 90 total days of service
Post-Vietnam 5/8/1975 – 9/7/1980 181 continuous days of service
24 Month Rule 9/8/1980 – 8/1/1990 (10/17/1980 for officers) 24 continuous months, OR the full period you were called to active duty (minimum 181 days)
Gulf War 8/2/90 – present 24 continuous months, OR the full period you were called to active duty (minimum 90 days)
Currently On Active Duty Any Any 90 continuous days
National Guard & Reserve Member Gulf War 8/2/1990 – Present 90 days of active service
  • Six years of service in the Selected Reserve or National Guard, AND
    • Were discharged honorably, OR
    • Were placed on the retired list, OR
    • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable, OR
    • Continue to serve in the Selected Reserve

Others may qualify as well, including WWII veterans with 90 total days of service, surviving spouses of veterans who died or became totally disabled on active duty or as a result of their military service, and spouses of POW/MIA service people. Veterans of the US Public Health Service, US Merchant Marines, or active cadets and midshipmen at US military academies may also be eligible.

Property Requirements

After establishing VA eligibility, borrowers must establish that the property they want to buy conforms to VA home loan requirements. This is determined by an appraisal, which for VA establishes two things:

  • The property value is at or above the loan amount.
  • The property meets or exceeds VA minimum requirements.

VA Minimum Property Requirements

Since VA loans are for residential properties in which the borrower will reside, the VA has certain requirements that establish that the property is habitable and suitable for residential purposes. A few of these requirements include:

Accessible

You must be able to access the property year-round. If access requires crossing another property, easements must be in place and undisputed. Boundary lines must be far enough from the home to allow exterior maintenance.

Marketable

Property must be at least 75% residential, with a functioning bathroom, kitchen, living, sleeping and dining space. No more than 4 units should share common facilities such as laundry, storage or utilities.

Safe

Leak-free roof, well-ventilated attics, crawlspaces and basements, mechanicals in good, safe working order. Water service must be continuous and safe for drinking. Sewer or septic must be maintained and serviceable. Structures must be sound and surrounding property free of hazards. There are many other requirements as well, but thinking in terms of access, marketability and safety will help in the preliminary identification of suitable properties.

Credit Requirements

The VA home loan is a guarantee made to lenders that ensure repayment of a loan; it protects the lender against default. This means that in addition to establishing VA eligibility and ensuring that the property they want to buy meets VA requirements, borrowers also must meet lender credit requirements in order to qualify for a VA home loan. These include:

  • Credit Score – The VA does not have a minimum credit score to qualify for VA loan, but many of the actual lenders do. A commonly used benchmark would be a score of around 580. This does not mean scores below this benchmark won’t be considered, but they may require lenders to scrutinize the entire loan package more carefully.
  • Income – One benefit of the VA loan program is that the monthly debt-to-income (DTI) requirements to obtain a loan can be more flexible than with other programs. There is no maximum DTI to obtain a VA loan, although a DTI ratio of 41% is considered a benchmark for most lenders. A higher DTI may be considered with the additional scrutiny of your financials.
  • No Loan Maximum – There is no maximum amount for a VA loan, HOWEVER, the VA only guarantees loan amounts up to $424,100 for most of the country, including Maricopa County and the Phoenix Valley. Amounts above $424,100 will require a down payment of 25% above the VA guaranty limit. VA loans above this limit are often called VA jumbo loans – a little-known benefit!

The VA home loan program is an amazing benefit for eligible veterans who want to buy a home in the Phoenix Valley. However, it’s a program that requires expertise on the part of your lender to ensure your loan process goes smoothly. If you have questions about VA home loan requirements or you’re wondering whether you qualify, contact the Eddie Team today for more details.

Funding Fee on Purchase for First Time Use
Down Payment Amount Veteran/Active Duty Reservist/National Guard
Less than 5% 2.15% 2.40%
Between 5% and 9.99% 1.50% 1.75%
Greater than 10% 1.25% 1.50%

Funding Fee on Purchase if You Have Used Your VA Eligibility Previously
Down Payment Amount Veteran/Active Duty Reservist/National Guard
Less than 5% 3.30% 3.30%
Between 5% and 9.99% 1.50% 1.75%
Greater than 10% 1.25% 1.50%

Funding Fee If You Are Doing a VA cash-out Refinance

  • The Funding fee is not reduced on cash-out VA loans
Type of Veteran First Time Use Subsequent Use
Regular Military 2.15% 3.30%
Reserves/National Guard 2.40% 3.30%

Type of Loan Percentage for Either Type of Veteran Whether First Time or Subsequent Use
IRRRLs .50%
Manufactured Home Loans (NOT permanently affixed) 1.00%
Loan Assumptions .50%