For this update, we’ll be talking about Eligibility Requirements for the VA Loan Program. Unlike other programs, the VA doesn’t have “categories” or “tiers” of borrowers to help with seeing how Lenders would view borrowers.
How to Apply For the VA Loan Program: Eligibility Requirements
The VA Loan program is a little different than other programs. For example, the USDA Loan Program has income requirements and the property must be in an eligible location as well. The VA Loan Program does have property requirements, but only that the home being purchased is deemed eligible by the Department of Veteran Affairs.
The VA sets the terms of the mortgages and guarantees a portion of the loan for the eligible borrower. This means that the borrower themselves will still need to submit all income and asset documentation for this loan. However, as mentioned before, this loan program is very lenient on income and assets requirements for a borrower.
The VA also allows for a financial assistance to build or repair a home as well. There are strict guidelines for whether or not one is able to apply for a VA Loan.
In order to qualify as a borrower for a VA mortgage, the borrower has to be one of the following:
- These guidelines are:
- You have actively served a consecutive 90 days during war time OR;
- You have actively served 181 days during peacetime OR;
- You have more than 6 years of service in the National Guard or Reserves OR;
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability
Remember, you only need to fulfill only ONE of the above conditions to be eligible for a VA home loan.
The VA Loan Program will approve new construction as well as existing homes, just like other loan programs. Remember, homes can be purchased if they require repair or complete renovation, as the VA can help with renovation loans as well. However, if the VA loan includes repairs, these homes will need to be repaired to meet guidelines before the lender can approve the loan.
The home being purchased for VA Loans cannot be used as secondary home. It must be the borrower’s primary residence. Additionally, homes are allowed to have “income-producing” qualities, such as a back entrance to the basement which may have a kitchen and bathroom in it.
For VA Loan Programs, the borrower has to meet credit requirements and VA’s definition of a Veteran. As mentioned before, borrowers only need to fulfill these requirements specifically to get a loan. There aren’t any “tiers” or levels of borrowers that are better off than others by any significant margins like other loans.
And because the VA makes the terms of the loan, the interest rates are usually as low as possible and aren’t influenced by the borrower’s credit too steeply if they are higher than the required 620 credit score.
For the next part, we’ll be discussing more about what it’s like to go through the VA Loan program