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In order to be eligible for a VA loan, active duty service members, National Guard members and reservists must meet the basic service requirements stipulated by the Department of Veterans Affairs. In some cases, spouses of military members may also be eligible if their spouses passed away during active duty or because of a service-related injury.
While the Department of Veterans Affairs will ultimately decide if a borrower is eligible for a VA loan, borrowers are eligible if they meet one or more of the following conditions requirements:
• A borrower has served 90 consecutive days of active service during wartime
• A borrower has served 181 days of active service during peacetime
• A borrower has more than 6 years of service in the National Reserves or Guard
• The spouse of a service member who has died during active duty or because of a service-related injury
• Most importantly, a veteran applying for a VA loan cannot have been discharged under dishonorable conditions. This will render them ineligible for a VA loan.
It’s important to remember that while Veterans Affairs determines the guidelines for eligibility, private lenders who finance home purchases may have additional requirements a borrower must adhere to such as income and credit. A Mortgage Specialist from Veterans United will pull a borrower’s credit from the three leading credit agencies, when they first apply for a VA loan, to determine their debt-to-income ratio.
Veterans interested in purchasing a home with a VA loan aren’t required to reach any minimum income threshold though they are required to have a stable and reliable income to cover their monthly expenses including, but not limited to, their new monthly mortgage payment. Borrowers must also have a certain amount of funds left over—after all the mandatory, bigger expenses are paid—and is called residue income and it meant to cover expenses such as food. A stringent residue income requirement is one of the reasons that VA loans maintain the lowest foreclosure rates of all major lending options.
While a VA Loan Certificate of Eligibility (COE) is not necessary to begin the loan process with Veterans United, it is a crucial part of the loan application as it details the character and length of the borrower’s service.
A borrower can apply for a COE three different ways:
1. Apply by mail with a VA Form 26-1880
2. Apply through a VA approved lender
3. Apply online through the VA’s eBenefits portal
The entire VA loan process is typically as short as 30 days or as long as 45 days once the borrower has signed a purchase contract. While every situation is different, applying for a VA loan doesn’t compel a borrower to any particular lender or to moving forward with the process if they have decided not to after the loan process has begun.
At PS Financial Services, a mortgage company owned by a veteran, we committed to offering the best service to our veterans. As a thank you for their service, we want to make the process as smooth and quick as possible. Please give us a call at (888)845–6630 or email us at firstname.lastname@example.org if you are interested in receiving more information on VA loans or discussing your options.