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Before closing on a VA loan, you must meet requirements set by the Department of Veterans Affairs (VA) and specific lender guidelines. The VA sets minimum service requirements, while loan lenders set their own financial requirements for things like credit, income, and debts—based on the broad VA guidelines.

Let’s explore everything you need to know about VA loan eligibility requirements and guidelines.

Who can qualify for a VA loan?

Generally speaking, current service members, Veterans, and certain surviving spouses can qualify for a VA loan by meeting service requirements. The VA typically requires prospective borrowers to meet one of the following conditions:

  • Serve 90 consecutive days on active duty during wartime
  • Serve 181 days on active duty during peacetime
  • Serve 6 years in the Reserves or National Guard, or 90 consecutive days under Title 32 orders, 30 of which must be consecutive
  • Be the surviving spouse of a service member who died while serving or due to a service-connected disability.

Even if you don't meet the service length of one of the conditions above, you may still be eligible if you were discharged for reasons such as:

If you have a qualifying disability rating, you may also be eligible for a VA funding fee exemption.

Does Basic Training Count Toward My VA Loan Eligibility?

VA guidelines state that basic training and advanced individual training (AIT) do not count toward the 90-day eligibility clock.

VA Loans and Spouses

Surviving spouses may be eligible for a VA loan if their service member or Veteran spouse passed away under qualifying conditions, is missing in action, or a prisoner of war. Additionally, if the Veteran was rated totally disabled before their death, then the surviving spouse may also be eligible.

Civilian spouses are not eligible for their own VA loan, but they can act as co-signers or co-borrowers with their service member or Veteran spouse. Having a co-borrower allows the Veteran to count their spouse’s income toward how much they can afford.

However, be aware that the opposite is also true. If the civilian spouse has poor credit or low income, they may negatively affect the loan terms.

Am I Eligible for VA Loan Benefits if I Received an Other Than Honorable Discharge?

The primary VA loan restriction is related to military discharge requirements. Anyone discharged under dishonorable, bad conduct, or other than honorable conditions is not typically eligible for a VA loan.

However, if the nature of your discharge prevents you from being eligible for VA loan benefits and you believe your situation deserves more consideration, you can apply for a discharge upgrade or correction. You may qualify for a discharge upgrade if you can prove your discharge was related to any of the following instances:

  • Mental health conditions, including posttraumatic stress disorder
  • Traumatic brain injury
  • Sexual assault or harassment during military service
  • Sexual orientation (including under the Don't Ask, Don't Tell policy)

It’s important to understand that a discharge update can take up to a year. You will likely need to submit supporting documentation, and you may also want to seek legal assistance, depending on the circumstances of your case. If your request for a discharge update was previously denied, you may apply again, but you will be more likely to succeed if your new application significantly differs from the last.

No matter what, you should request a lender to pull your Certificate of Eligibility (COE). A COE is a document that outlines if you are eligible for a VA loan and details your VA loan entitlement. Contacting a lender for your COE clears up the difficult questions around overlapping service or breaks in service. You can also contact the VA via their eBenefits portal or mail VA Form 22-1880 to the relevant regional loan center.

VA Loan Guidelines and Restrictions

Beyond the basic service requirements, the VA provides broad guidelines to lenders who finance VA loans. This ensures that lenders only do business with qualified applicants while also giving them the right to make business decisions.

Typically, to secure a VA loan, you must:

  • Be an eligible service member, Veteran, or military spouse with available VA loan entitlement
  • Use the VA loan for an eligible type of property
  • Meet VA loan occupancy requirements by living or intending to live in the home within a reasonable time (typically within 60 days of closing) and being your primary residence in most cases
  • Have an acceptable level of credit risk
  • Have stable employment and sufficient income to make mortgage payments, pay debt obligations, cover the costs of owning a home, and have enough left over for discretionary income after all major expenses.

Lenders typically have their own requirements, known as lender overlays, on top of VA guidelines.

VA Mortgage Lender Overlays

Mortgage lender overlays with a VA loan typically expand upon and specify the broad guidelines that the VA sets. For the most part, these overlays usually revolve around credit and income.

The VA doesn't set a specific minimum credit score for eligible VA borrowers, but VA loan lenders typically will. That said, lender overlays for credit score requirements are often more lenient due to the VA guarantee.

VA lenders will also calculate your debt-to-income (DTI) ratio, which is a snapshot of a borrower's monthly debts and payments compared to their gross monthly income. Lenders will set their own maximum DTI ratio. Borrowers with a DTI ratio above 41% need to meet a higher benchmark for residual income. With the VA’s residual income requirement, borrowers typically need to have a minimum amount of money left over each month after paying all significant debts and obligations. It’s measured to ensure borrowers and their families have enough money to cover basic living costs (e.g., food, transportation), and amounts vary based on family size and part of the country.

If borrowers have a high DTI ratio, they have less money to pay for their expenses, and lenders may have concerns about their ability to take on monthly mortgage payments. The VA loan program's low foreclosure rate success is partly due to these residual income requirements.

What's the Best Way to See if I'm Eligible for a VA Loan?

The best way to determine if you are eligible for a VA loan is to start with a lender. Lenders can pull your Certificate of Eligibility in minutes to see if you meet the basic service requirements and have VA loan entitlement. Additionally, a lender can review your financial information to determine if you meet credit and income guidelines. Check out the top VA loan lenders to get started today.

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ICB Solutions is a division of Neighbors Bank, which is an affiliate of Mortgage Research Center, LLC dba Veterans United Home Loans.

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