VA eligibility requirements

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Signed into law by FDR, the Servicemen’s Readjustment Act, or GI Bill, was intended to provide a means of home ownership for America’s service men and women yet require virtually no money out of pocket. A VA loan enables a service member or an honorably discharged veteran to purchase a home with no down payment and usually no closing costs.

In addition, because VA loans are guaranteed by the federal government, credit requirements are less stringent than they are for other types of loans. Combine this with the lower interest rates charged on VA home loans and the fact that private mortgage insurance, or PMI, is not required on VA home loans and a VA mortgage can be very appealing to a veteran or active duty service member. Typically, VA home loan rates are 0.5-1.0% lower than on a conventional loan and there is no PMI, which usually is added when the amount financed exceeds 80% of the value of the home.

In order to determine VA home loan eligibility, the veteran must complete a Request for Certificate of Eligibility, which is Form 26-1880, and submit that to the VA along with a copy of their DD214; active duty personnel must submit the Form 26-1880 along with a statement of service that is signed by his or her adjutant or higher. This statement must indicate the date the individual began his or her active duty service and any time that has been deducted from it. A lender can also obtain a Certificate of Eligibility for the applicant.

VA home loan eligibility can be reused; there is no limit to the number of times it may be used, although there may be residence limitations. However, if a VA home loan is foreclosed on and the government suffers a loss, the amount of the loss must be repaid before the service member can reuse the VA home loan.

The number of days of continuous active duty service performed and the type of discharge received determines VA home loan eligibility. The minimum period of service is 90 days during wartime and 181 days during peacetime; in addition, those who were dishonorably discharged are ineligible.

Particularly in the current economic situation with credit being more difficult to obtain, a VA home loan can be a very affordable way for an active duty service member or a veteran to achieve the American dream of home ownership.

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VA eligibility requirements