VA Loans Eligibility Criteria: Do You Qualify the Maze?

When it comes to the qualification criteria of traditional loans, veterans and other military service members are at a disadvantage due to the nature of their jobs. As they are often transferred from one place to another, it is difficult for their family members to get a steady job at one place -- leading to fluctuations in their credit score. To help them get a home of their own, the Department of Veteran Affairs, started VA loan program. These government backed loans offer equal opportunity to all qualified veterans to obtain finance for their primary residence. This brief read discusses four key essential elements required for VA loan approval.

Eligibility

To get approved of a VA loan, the borrowers must satisfy at least on the following requirements:

●       Veterans who have served during the WWII for required period

●       Service members who are currently on duty and fulfil minimum active duty service requirement

●       Certain Reservists and National Guard Members

●       Surviving spouses of deceased veterans

Property Entitlement

According to guidelines stipulated under VA loan, the benefit of the loan can be availed only for owner-occupied properties. The list of property eligible for VA financing include:

●       Single-family homes

●       VA-approved condos

●       Townhouses

●       Multi Family homes

In addition to this, VA also includes financing for modular homes if they are used as permanent residents; however, not all lenders offer VA loan for them.

Owner Occupancy

According to law, VA borrowers must occupy the property, for which they have applied for a loan. VA borrower is required to give in written the proof that they will occupy the home within a reasonable time. The time flexibility given to borrower is within 60 days of closing. Borrowers deployed far from the place are given the extension of 12 months. In the absence of borrower, the only spouse is eligible to satisfy the occupancy requirement in a VA-eligible borrower’s stead. Borrowers qualify for refinance loans only when they have occupied the home in the past.

Income & Credit

Though there is no fixed credit score limit stipulated under VA loan, the lenders are given some flexibility to decide whether a borrower is a safe lending prospect within VA guidelines. The VA, however, recommends borrowers have no more than 41% debt-to-income ratio and sufficient residential income to sustain living expenses. Having said that, refinancing in VA loan doesn’t require income and credit re-qualifying.

Conclusion

As bankers are tightening their lending standards, the market has witnessed a surge in demand for VA loans. To qualify for a VA loan, the borrower must have sufficient income, suitable credit and a valid certificate of eligibility. Once approved the loan amount may vary depending on borrower’s entitlement and ability to pay.