Getting Your Certificate of Eligibility
Guide to VA Loans
The VA determines your eligibility and, if you are qualified, the VA will issue you a certificate of eligibility to be used in applying for a VA loan. Should you need to request a certificate from the VA, you must complete VA Form 26-1880, Request for a Certificate of Eligibility. You can also apply for a COE onlie through the e-benefits portal, or your VA lender can request this on your behalf.
VA LOAN QUESTIONS AND ANSWERS
1. What service is not eligible?
You are not eligible for VA financing based on the following:
- World War I service.
- Active Duty for Training in the Reserves.
- Active Duty for Training in the National Guard (unless "activated" under the authority of title 10, U.S. Code).
2. Does this kind of service provide entitlement to any other veterans' home loan benefit?
Yes. World War I and Active e Duty for Training service may quality you for a HUD/FHA veterans' loan.
Under the National Housing Act loan program, the Federal Housing Administration of the Department of Housing and Urban Development administers a loan program for veterans. Financing under this program is available under slightly more favorable terms than those available to non veterans: VA's only role in this program is to determine the eligibility of the veteran and, if qualified, issue a Certificate of Veteran Status as evidence of entitlement to HUD/FHA loan benefits for veterans.
You may get a Certificate of Veteran Status by completing VA Form 26-8261a, Request for Certificate of Veteran Status, and submitting it with the attachments listed in the instructions to any VA regional office or center for a determination of eligibility.
All veterans discharged under other than dishonorable conditions from at least 90 days of service which began before September 8, 1980, are eligible. Veterans of enlisted service in a regular component of the Armed Forces, which began a her September 7, 1980, or officers or reservists who entered on active duty after October 13, 1982, must have served at least 24 months of service or the full period for which called to active duty or Active Duty for Training before being discharged, unless the discharge was for hardship or disability.
3. What can a veteran do who has lost his or her original discharge papers and does not have a legible copy?
The veteran should obtain a Certificate in Lieu of Lost or Destroyed Discharge. Any VA Veterans Benefits Counselor at the nearest VA office will assist a veteran in obtaining necessary proof of military service.
4. Does a veteran's home loan entitlement expire?
No. Home loan entitlement is generally good until used. However, the eligibility of service personnel is only available so long as they remain on active duty. If they are discharged or released from active duty before using their entitlement, a new determination of their eligibility must be made, based on the length of service and the type of discharge received.
Note: Eligibility for members of the Selected Reserve expires September 30, 2007.
5. How much entitlement does each veteran have?
Originally, the maximum entitlement available was $2,000; however, legislation enacted since that time has provided veterans with increases in entitlement up to the present maximum of $36,000 (or up to $104,250 for certain loans over $144,000). The $36,000 may, however, be reduced if entitlement has been used before to get a VA loan. The amount of remaining entitlement can be determined by subtracting the amount of entitlement used from the current maximum available entitlement of $36,000. (See question 8 below for information on using remaining entitlement.)
6. Does VA home loan entitlement provide cash to the veteran?
No. The amount of entitlement relates only to the amount VA will guarantee the lender against loss.
7. Can a veteran get used entitlement back to use again?
If you have used all or part of your entitlement, you can get that entitlement back to purchase another home if the following conditions for "restoration" are met:
- The property has been sold and the loan has been paid in full, or
- A qualified veteran-transferee (buyer) must agree to assume the outstanding balance on the loan and agree to "substitute" his or her entitlement for the same amount of entitlement you originally used to get the loan. The buyer must also meet the occupancy and income and credit requirements of the law.
- ONE TIME ONLY if you have repaid the prior VA loan in full, but have not disposed of the property securing that loan, the entitlement you used in connection with that loan may be restored.
8. If the requirements for restoration cannot be met, is there any other way a veteran can obtain another VA loan?
Yes. Veterans who had a VA loan before may still have "remaining entitlement" to use for another VA loan. The current amount of entitlement available to each eligible veteran is $36,000 ($104,250) for certain loans over $144,000). This was much lower in years past and has been increased over time by changes in the law. For example, a veteran who obtained a $25,000 loan in 1974 would have used $12,500 guaranty entitlement, the maximum then available. Even if that loan is not paid off, the veteran could use the $23,500 difference between the $12,500 entitlement originally used and the current maximum of $36,000 to buy another home with VA financing.
Most lenders require that a combination of the guaranty entitlement and any cash down payment must equal at least 25 percent of the reasonable value or sales price of the property, whichever is less. Thus, in the example, the veteran's $23,500 remaining entitlement would probably meet a lender's minimum guaranty requirement for a no downpayment loan to buy a property valued at, and selling for, $94,000. The veteran could also combine a down payment with the remaining entitlement for a larger loan amount.
9. May several veterans use their entitlement to acquire property together?
Yes. The guaranty is based on each veteran s interest in the property, but the guaranty on the loan may not exceed the lesser of 40 percent of the loan amount or $36,000 ($104,250 for certain loans over $144,000).
10. If both a husband and wife are eligible, may they acquire property jointly and so increase the amount which may be guaranteed?
They may acquire property jointly, but the amount of guaranty on the loan may no exceed the lesser of 40 percent of the loan amount or $36,000 ($104,250 for certain loans over $144,000).
11. May a veteran join with a non veteran in obtaining a VA loan?
Yes, but the guaranty is based only on the veteran's portion of the loan. The guaranty cannot cover the nonveteran's part of the loan. This does not apply to a loan to a veteran and spouse when the spouse is not a veteran. (Consult lenders to determine whether they would be willing to accept applications for joint loans of this type.)
12. Does the issuance of a certificate of eligibility guarantee approval of a VA loan?
No. The veteran must still be found to be qualified for the loan from an income and credit standpoint.