| VA home loans are a very attractive benefit for veterans. These guaranteed loans are insured by the Department of Veteran Affairs and usually require no down payment. Eligibility is determined by the VA. If you want to apply for a VA loan, here is what you should know before you get started.
Determine Your Eligibility for a VA Loan to Start the Application Process
The VA Loan Guaranty Service, a division of the Department of Veteran Affairs, is responsible for determining eligibility and providing administration for VA home loans. Eligibility Requirements include:
- Time served: usually 90 to 181 consecutive days served depending upon time of service.
- Time of service: war time or peace time (requirements may vary between service periods and wars)
- Type of discharge: veterans discharged dishonorably are not generally eligible for veteran home loans.
- Eligibility extends to spouses of veterans under certain conditions.
Service members in a few other organizations such as Public Health Service officers and military cadets may also benefit from VA home mortgage loans. If you think you qualify for a VA home mortgage, you must complete the following a VA Form 26-1880. If a review of the form by the Department of Veteran Affairs finds you eligible for a VA loan you will be issued a Certificate of Eligibility. Alternately, your lender may be able to help you determine eligibility using ACE (Automated Certificate of Eligibility) an Internet based program that can issue certificates to qualified veterans in a matter of moments. If your ACE application cannot be processed you will need to contact the Department of Veteran Affairs. Documentation you may need to provide includes:
- Copies of your most recent discharge papers (this speeds the determination process).
- Documentation regarding payment of any prior VA loans.
- You can generally expect an answer within two business weeks.
You May Be Able to Refinance Your VA Home Mortgage to a More Affordable Interest Rate.
Veterans interested in taking advantage of VA loan rates reductions can apply for an Interest Rate Reduction Financing Loan (IRRFL). This type of VA loan is alternately referred to as a streamline loan. IRRFL’s offer great benefits including:
- No Department of Veteran Affairs required appraisal or credit underwriting costs (your lender may have separate requirements).
- No out of pocket costs.
- No owner occupancy requirement.
- Possibility for reduced VA loan rates.
- IRRFL loans carry other important conditions. It is important to talk with several lenders and consider all information carefully before making a decision. Inadequate research may lead home owners to sign onto a VA loan that exceeds the value of the home or makes monthly payments unmanageable.
You May Still Qualify for a VA Home Mortgage Even if You Have Bad Credit
Bad Credit VA Loans may be available depending upon the applicant’s most recent credit history. If you have bad credit you should contact the VA for referrals to Credit Counseling agencies that can help you implement a plan of improvement. Your application has the greatest chance of a favorable review if it has support from the Counseling Agency and if your credit and payment history has improved.
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