VA Home Loan Requirements for 2024

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The U.S. Department of Veterans Affairs (VA) gives qualifying veterans, service members and surviving spouses access to zero-down mortgages. The terms are generous, but lenders can set their own criteria for credit scores and other underwriting factors. The VA also sets some stipulations. Here’s an overview of VA home loan qualifications.

VA home loan eligibility requirements

These are the main requirements for getting a VA-backed purchase loan:

• You must be entitled to and obtain a Certificate of Eligibility (COE) based on your military service record, including:
  • Active-duty service members who have served at least 90 continuous days
  • Veterans who meet minimum service requirements, based on their service era and reasons for discharge
  • Some members of the Reserve and National Guard
  • Eligible surviving spouses
• You must live in the home you’re buying.
• You must meet the lender’s underwriting requirements, including those for credit and income.

As of 2020, VA loans no longer impose loan limits for qualified borrowers. That means first-time VA loan borrowers have no VA-mandated cap on the size of their loans. While they might still be subject to an appraisal or home inspection, these requirements are designed to ensure the home is properly valued, not that it’s worth a set dollar amount.

There is also a VA loan funding fee that most borrowers have to pay, which ranges from 0.5 percent to 3.3 percent based on your loan type, how much you put down and whether it’s your first VA loan. Veterans with service-related disabilities and some surviving spouses don’t have to pay a funding fee. Purple Heart recipients on active duty are also exempt from the fee.

VA home loan qualifications

The VA doesn’t heavily regulate the loans it backs, but the lender issuing the VA loan applies its own underwriting criteria. As a result, factors like an applicant’s credit score, income and outstanding debt all generally come into play.

Minimum credit score for VA home loans

The VA doesn’t impose a minimum credit score for VA home loans. Instead, it requires lenders to look at the borrower’s overall risk profile. However, lenders can and do set their own underwriting requirements, and many want to see a credit score for VA loans of 620 or higher.

Debt-to-income (DTI) ratio for VA loans

While the VA doesn’t set any income requirements or debt thresholds, it does care about how those two factors interplay. Generally speaking, the VA requires borrowers to have a debt-to-income ratio of 41 percent or less. That means the sum of all your monthly obligations should be less than 41 percent of your monthly incoming funds. There are some workarounds (e.g., if you have tax-free income that skews the ratio), but most VA loans are issued to borrowers who meet this qualification.

VA loan down payment requirements

If you want to qualify for a VA loan without making a down payment, you’ll need full entitlement. You have full entitlement if:

• This is your first VA home loan.
• You’ve taken out a VA loan before, but you paid it off and sold the home.
• You’ve taken out a VA loan before, but you repaid it after a foreclosure or compromise claim.

This also assumes that you’re not paying more for the home than the appraised value. In that case, you may be required to make a down payment. You may also be required to make a down payment if you don’t have full entitlement, for example, if you’re still paying off a VA loan, or if you paid off a VA loan but didn’t sell the home.

VA loan property requirements

Again, the VA doesn’t require a home inspection, though you should get one to ensure you know the condition of the property you’re buying. Your lender might also require one.

The VA does mandate an appraisal of the property — and most lenders do, too. That appraisal is the VA’s way of making sure the sales price for your soon-to-be home doesn’t exceed its value, often by comparing it to similar, recently sold properties nearby. An appraisal also checks that the house meets the VA’s minimum property requirements. For example, the VA requires that properties have:

• Access from a street with an all-weather surface
• Permanently installed heating
• A continuous supply of clean water
• A roof that keeps moisture out of the house

Next steps in applying for a VA loan

Once you’ve figured out if you qualify for a VA loan, it’s time to start looking for a lender. It’s a good idea to compare multiple lenders — at least three — to make sure you get the best VA loan rate and terms. Once you find the lender you want to go with, formally apply for a VA loan.

FAQ

• How does a VA loan work?
  

  VA loans give service members, veterans and eligible surviving spouses more favorable terms on primary mortgages and refinances than conventional loans and even other government loans. This can include no down payment or mortgage insurance requirements, more flexible credit underwriting standards and lower interest rates.

• What documents do I need for a VA loan?
  

  Getting a VA loan requires a certificate of eligibility. You can get your — or an eligible spouse’s — COE through the VA eBenefits website or by mail, or your lender might be able to get it for you. You’ll also need documentation that proves the borrower has met minimum service requirements. Veterans need a Form DD214 describing their character of service and reason for separation. Active-duty service members need a current statement of service signed by a unit commander, personnel officer or other authority. Check out the VA eBenefits website for specific documentation requirements pertaining to your situation.

• Can a spouse apply for a VA loan?
  

  Yes, surviving spouses might be eligible for a VA loan. Here are some eligibility cases, according to the VA: a surviving spouse (who has not remarried) of a veteran who died in service or from a service-related disability, a spouse of a prisoner of war or service member missing in action, or a surviving spouse of a veteran who is receiving compensation for a non-service-related death.

• What is a certificate of eligibility (COE)?
  

  To apply for a VA loan, you must have a certificate of eligibility from the U.S. Department of Veterans Affairs. This document proves your military service and shows your eligibility for a VA loan.