The process of obtaining a VA loan in an effort to buy a home can seem like a daunting task. There is a great deal of paperwork and specific requirements. While it is vital that you work with a lender who knows the ins and outs of the VA loan procedure, here are some additional things you can expect to run into during the process.
It’s important to acknowledge that there are certain service requirements that must be met in order to obtain a VA mortgage. In general, it’s required that the applicant has either served 90 consecutive active duty days during wartime or 181 days during peacetime. As a member of the Reserves or National Guard, the tenure requirement increases to 6 years (unless you are called to serve, in which case you become eligible after 181 days). Spouses of those killed in the line of duty are also eligible for VA mortgages. If you don’t meet those requirements due to these exceptions, you can still be deemed eligible.
Certificate of Eligibility
The myth that you have to produce your Certificate of Eligibility (COE) upon loan application is a prominent one. However, most lenders are able to pull your COE through the VA automated system. This is a required part of your loan application process, but the lender that you choose to work with will be able to help you obtain it. Although there are some required forms to obtain your COE, your lender should be able to reduce your stress during this phase.
Credit and Income Requirements
The most appealing part of the VA loan process is that the credit and down payment requirements are significantly lower than they are with standard loans. Since the Department of Veteran Affairs guarantees a portion of the loan, lenders are able to reduce the credit score requirements, and most recipients are to have a minimum credit score of around 620. While the debt-to-income ratio is taken into consideration (requiring that the ratio is at or below 60%), there is generally no down payment required for a VA loan. The VA simply requires that borrowers have a certain amount of money left over each month after their major expenses are paid.