VA Home Loan Requirements – Who Qualifies?

If you’re eligible for VA benefits, don’t overlook the mortgage benefit. It’s one of the most helpful benefits veterans receive and it far surpasses most other loan programs available today. With no down payment requirements and simple underwriting guidelines, it’s easy for veterans to get the financing they need to buy a home.

But who qualifies? Here’s what you must know.

You Must Have Served in the Military

First, let’s focus on eligibility. It’s different than qualifying but is important. You must have served in any branch of the military. If you were in the realgar military, you must serve at least 181 days during peacetime or 90 days during the war. If you served in the National Guard or Reserves, you’re eligible after 6 years of service.

There is an exception, though. If you’re a spouse of a veteran who died in the line of service or because of his/her time in service, you may be eligible too.

Qualifying for the VA Loan

Once you know you’re eligible for the program, here’s how to qualify.

Decent Credit

You need ‘decent’ credit. Notice we didn’t say perfect credit. You just need to prove you’re responsible and pay your debts on time. Typically, you can get by with a 620-credit score which is lower than most other loan programs.

Adequate Income

Like any loan, you must prove you can afford it by proving your income. While there isn’t a minimum or maximum amount of income you must earn, you must prove you make enough money to cover your current debts plus the mortgage.

Average Debt-to-Income Ratios

Your debt-to-income ratios shows lenders how much of your income is spoken for already. A high debt ratio means most of your income goes to debts. This puts lenders at a higher risk of default.

VA loans are flexible in the DTI guidelines, though. They don’t have a specific DTI you must have. Instead, they look at your disposable income. They ensure you have enough money left over after paying your bills each month to cover the costs of a family your size in the location you live.

A Decent Home

Many people think it’s hard to get a home through the VA home appraisal, but it’s not. Basically, the VA wants to know that the home is safe, sound, and sanitary. They protect your interest in the home – you wouldn’t want to invest in a home that’s not worth as much as you’re paying or that requires extensive repairs, right?

How Much can you Borrow?

Even without a down payment, the VA doesn’t have loan limits. Instead, you can borrow as much as you can afford according to the above guidelines. 

It’s best to ensure your credit, income, and debt-to-income ratios are as low as you can get them before you apply, but since VA loans have flexible guidelines, there’s more room for error in this loan program than any other. If you’re a veteran, consider your VA loan options and see how much money you can save.

Written by the Mortgage Loan Center.