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There are a few factors to consider when it comes to VA loan requirements, including requirements set by both the U.S. Department of Veterans Affairs and lenders.
In order to be approved for a VA loan, you’ll have to meet the following requirements:
In the following sections, we’ll take a deeper dive into these requirements.
As a veteran who’s served our country, you’ve earned fantastic benefits that can help you buy or refinance a home with a VA loan. Before you can access these benefits, though, it’s important to ensure your eligibility for a VA loan.
When applying for a VA loan, you’ll need to prove your service with a certificate of eligibility (COE). In order to obtain a certificate of eligibility, you must meet at least one of the following criteria:
You can request a COE from the VA online or via mail. You may also ask your lender to obtain the certificate on your behalf.
Don’t meet the service requirements above? You may still qualify for a VA loan if your service ended under the following circumstances:
In fact, there are several benefits that veterans with service-connected disabilities are eligible for. For example, most borrowers must pay a VA loan funding fee ranging from 0.5 percent to 3.3 percent, depending on factors like the type of loan, the value, and whether or not you have taken out a VA home loan before. There is an exception, however, for veterans with service-connected disabilities, as well as some surviving spouses and Purple Heart recipients on active duty.
Veterans with service-connected disabilities may also be eligible for a Specially Adapted Housing (SAH) grant, which helps veterans with disabilities modify their homes to meet their needs.
One of the biggest benefits of VA loans is the fact that the credit score requirements are more flexible than those of conventional home loans. In fact, the VA has no minimum credit score requirements for home loans. However, lenders usually do.
Most VA lenders require a minimum credit score of 620, but you may qualify for a VA home loan with a score as low as 500.
If you have a lower credit score, it’s not necessarily the end of the road. You could still qualify for a VA home loan, but you’ll likely be charged higher interest rates, and you may be required to provide additional documentation to prove you can repay the loan.
Likewise, higher credit scores could result in lower interest rates and minimal down payments.
In addition to your credit score and eligibility, VA lenders will assess your income and debt-to-income ratio (DTI) when you apply for a VA home loan. This is in order to ensure that you are able to afford your mortgage payments, property taxes, and insurance.
As with credit scores, there are no home loan income limits or debt-to-income ratio requirements set directly by the VA. (If you don’t have your full entitlement, though, the VA does set limits on how much you can borrow without providing a down payment.)
Most lenders, however, do set debt-to-income ratio requirements for all borrowers. In order to qualify for a VA loan, you typically must have a debt-to-income ratio of 41% or lower. This ratio refers to the amount of your income that must go towards any debt you have.
Calculating your debt-to-income ratio to determine whether or not you meet the VA loan requirement is simple.
Start with your monthly income (your yearly income divided by 12), then multiply that number by the maximum DTI of .41. If the result is $1640 or lower, congrats! You meet the requirement.
If, however, you have a higher DTI, you may still qualify for a VA home loan. Your loan application will just have to undergo a more thorough inspection.
If your DTI ratio is higher due to tax-free income, your residual income exceeds 20% of the acceptable limit, or you have an especially high credit score, you can still qualify–and there may be further exceptions on a case-by-case basis, so don’t fret!
On top of the VA loan requirements we’ve discussed in this guide, there are additional financial factors that can play into your VA loan approval, including:
Applying for a VA loan isn’t as complicated as it may seem. At Commander Mortgage, we make it easier than ever. Here are a few simple steps to bring you closer to your dream home:
Simple as that!
Overall, one of the many great things about VA home loans is that the requirements are extremely flexible. While most lenders prefer a minimum credit score of 620 and a debt-to-income ratio no higher than 41%, the most important criteria is simply your service.
If you have a Certificate of Eligibility to prove your service duration (or that you’re a surviving spouse), you already have one foot in the door. The next step is to review your credit score and overall financial health. If needed, you can take steps towards greater financial stability and a higher credit score to increase your chances of the best possible loan terms–and your chances of securing the home you deserve.
Ready to take the next step toward homeownership? At Commander Mortgage, it’s our privilege to serve those who have served our country by offering tailored VA home loans. We’re here to help veterans, active-duty service members, and their families navigate the VA loan process with ease.
Whether you're looking to purchase your first home or refinance, our expert team is here to guide you every step of the way with unparalleled expertise and care.
Contact us today to learn more about how you can qualify for a VA loan and secure the best possible terms.