Are you a current or former American service member (or an eligible surviving spouse) struggling to buy a home or refinance a mortgage? If so, a VA loan could be just what you need. While private lenders like banks and mortgage companies provide the loans themselves, a portion of each loan is guaranteed by the U.S. Department of Veterans Affairs, with loan terms that may be more favorable than regular mortgages. Read on to learn what you need to know about VA home loan requirements.

Certificate of Eligibility

Once you've determined that you're eligible for a VA home loan, you'll need to get a Certificate of Eligibility (COE) to show lenders that you qualify. Veterans, and current or former National Guard or Reserve members with active service must complete a DD Form 24 for a COE. Active duty service members and current National Guard or Reserve members who've never had active federal service must provide a detailed current statement of service signed by their adjutant, personnel officer, or commander of their unit. National Guard discharged members without active federal duty need a form NGB Form 22 or NGB Form 23 if retired, while Selected Reserve discharged members must show a current annual retirement points statement and proof of honorable service. Surviving spouses receiving Dependency & Indemnity Compensation (DIC) benefits submit forms VA 26-1817 and Veteran's DD214 to receive a COE, but if you don't receive DIC benefits use VA-form 21-534, DD214, your marriage license, spouse's death certificate, or DD Form 1300.

Apply for a COE online, through your lender, or via mail using Form VA 26-1880. Surviving spouses may only apply through a lender or via mail.

Time of Service Necessary to be Eligible

The minimum service requirement for these loans is 90 days of continuous service for active service members. National Guard and Reserve Member veterans of the Gulf War must have served 90 days of active service any time between 8/2/1990 and the present. National Guard and Reserve members require six years of service plus an honorable discharge or placement on the retirement list, or transfer to Standby or Ready Reserves, or they must currently serve in the Select Reserves.

Veterans of WWII, the Korean War, and the Vietnam War have a minimum active service duty requirement of at least 90 days, while those with post-war service for each of these wars have a minimum service time of at least 181 days. For more details on the eligible war dates and post-war service dates, visit the U.S. Department of Veterans Affairs Home Loans Eligibility page.

Type of Military Service Required

If you or your deceased spouse have served at least 90 consecutive days of active military duty during wartime, or at least 181 days of consecutive service post-wartime, or if you've served at least 6 years in the National Guard or Reserves, you may be eligible for a Veteran's Affairs Home Loan.

VA Loans Income Requirements

VA home loans have among the lowest default rates among American homeowners, despite offering zero-down mortgages that don't require any down payment from the borrowers. This may be due to what's known as the residual income requirement for these loans, which is simply "how much money is left each month after all the bills, including a mortgage are paid?" The residual income requirement varies according to state and family size. To find the residual income requirement for your state, visit the VA Loan Residual Income Guidelines for All Fifty States and the District of Columbia.

In addition to the residual income requirement set by Veterans Affairs, the lender will also have income requirements to make sure your household has enough income to carry your existing debts plus the payments on a new mortgage. In most cases, the Department of Veteran Affairs has a maximum debt-to-income (DTI) ratio of 41 percent. However sometimes, if your residual income is high, you may qualify for a VA home loan with a higher DTI ratio.

VA Loan Credit Requirements

While there's no minimum credit score requirement for a VA home loan, lenders must order a credit report and review your history to make sure it's satisfactory. If you've had delinquencies or other credit issues, prepare to explain the situation and how/when it was resolved. Your lender will consider your overall loan application, including your credit report, before deciding to approve it.

How Many Times Can I Use a VA Loan?

There is no limit on the number of times you can use a VA loan. Even better, VA home loans may be used to purchase a new home, or even to refinance your current mortgage under the Interest Rate Reduction Refinance Loan (IRRRL) program.

Home Requirements for a VA Loan

VA home loans have minimum property requirements (MPRs) that must be met for loan approval. These MPRs include:

  • single family, marketable home with no more than 25 percent of space used for non-residential purposes
  • each unit must include living, sleeping, cooking, and sanitary (washroom) spaces
  • mechanical systems must be safe and operational
  • heating systems must meet noted MPRs for relevant unvented heating systems, wood stoves, or solar systems
  • each home must have hot water, potable drinking water, and a sewage disposal system
  • the roof must effectively keep moisture out
  • homes must be properly ventilated (including crawl space areas)
  • electricity

VA loans provide excellent benefits and perks for America's veteran and current service members. Understanding the requirements for you as a borrower as well as the property requirements before shopping for a new home may help save time and disappointment in your home search. Ready to apply? Request a free VA home loan quote from LendingTree's network of VA approved lenders.

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