The VA Home Loan Eligibility
For those who are eligible for a VA loan, it’s hands-down the best option when financing a purchase while coming to the closing table with as little cash as possible. The VA mortgage doesn’t require a down payment and restricts the borrowers from paying certain closing costs. Further, borrowers can choose from fixed rates ranging from 10 to 30 years and adjustable rate VA loans in the form of a hybrid loan. Hybrids loans are so-called because they’re fixed for an initial period of time before changing into a loan that can adjust once per year. Lots of choices, no down payment and restricted closing costs. Quite the trio for a home loan, don’t you think? But not everyone is eligible for a VA loan and there are some that are eligible and may not know it. Let’s take a look at VA home loan eligibility and how that eligibility is verified.
Veterans of the armed forces are the primary recipient of a VA loan approval. In addition, active duty personnel are also eligible with at least 181 days of service. Members and veterans of the National Guard and Armed Forces Reserves with at least six years of service may qualify as well as unremarried surviving spouses of those who died while serving or as a result of a service related injury. As you can see, VA loans can be used by more than just veterans. But how does a lender determine if someone is eligible for a VA loan?
On a loan application there is an area that asks what type of loan is being requested. The borrowers check the appropriate space indicating a request for a VA home loan. But the lender needs more than just this. The lender needs a copy of the borrower’s Certificate of Eligibility obtained directly from the Department of Veteran’s Affairs. Only this document certifies the borrowers are VA eligible.
There are several ways to obtain this certificate. The veteran can make the request directly to the Department of Veteran’s Affairs either in person, by fax or online. Depending upon how the request is made, the certificate is delivered in two to three weeks. However, the most convenient and efficient way to obtain the certificate is to let the lender make the request on the borrower’s behalf. VA approved lenders have access to the Automated Certificate of Eligibility, or ACE. This is an electronic request made by the lender to the VA and the certificate can be generated almost instantly.
Finally, it should be noted that the certificate does not guarantee a loan approval, only that the borrowers are eligible for a VA loan. Borrowers must still qualify based upon a minimum credit score, sufficient monthly income, employment and verified funds to close. This approval process is nearly identical to any other type of mortgage approval. Further, the property must meet VA guidelines as well as determine the property’s marketability.