The VA home loan is still one of the only loans to offer no down payments. Today, VA home loans are available to more than 20 million veterans and active military members. As banks tighten lending standards the demand for VA home loans has increased tremendously and they’re easier to qualify for than conventional mortgages.
Although the US Department of Veteran Affairs is not a lender, the loan is made through private lenders and are guaranteed by the VA as long as the borrower qualified and guidelines are met. The VA has guaranteed close to 500,000 loans just last year alone. That’s close to 30% more than the number of VA loans issued in 2014 and 3 times the number of VA loans the previous year.
VA Loan Eligibility
If you think you’re eligible for a VA home loan, here are a few must-knows about the program.
Members of the military, veterans, reservists and National Guard members are eligible to apply for a VA loan. Spouses of fallen military members who died while serving or who have a disability are also eligible to apply for a VA loan.
Active duty members who have served at least 6 months of service are eligible to apply for a VA loan. Reservists and National Guard members must wait at least 6 years before being eligible to apply. During war periods members are eligible after only 90 days of service. Service men and women are required to produce a COE or also known as a Certificate of Eligibility before applying for the VA loan. This form can be found online.
Advantages of a VA Home Loan
Veterans can take advantage of no down payments, while all other conventional loans still require down payments. The VA also doesn’t require mortgage insurance either. This creates a significant amount of savings every month for VA borrowers.
The VA does not require a minimum credit score for a VA loan, but lenders usually have their own credit requirements. Majority of VA lenders ask that your credit score be at least a 620 or higher. VA borrowers must also show sufficient income that shows they are able to repay the loan. Veterans are also able to use the VA Home Loan after a foreclosure or bankruptcy. VA loans can only be used for a home that the veteran is going to live in as their primary residence. It cannot be used to purchase or refinance an investment property. The borrowing limit on VA home loans will vary, but majority of lenders will limit the amount to around $415,000.