How to Start Using Your VA Home Loan Benefits

By learning about VA home loan requirements and application methods, you will find out how to begin using any benefits that you may qualify for.

There are several different home loan benefits that are offered by the Department of Veterans Affairs (VA). In most cases, the VA will guarantee a portion of your loan offered by an approved vendor in order to ensure that you receive better loan terms as well as lowered loan eligibility requirements. To receive VA home loan benefits, you must meet certain qualifications, including requirements related to service, income credit score and debt-to-income ratio.

Additional eligibility requirements may apply, depending on the loan program that you wish to enroll in. You can obtain a VA home loan Certificate of Eligibility (COE) once you qualify. This certificate can be applied for by mail, at any VA office or through approved lenders. 

What is a VA home loan?

A VA home loan is a loan program offered by the Department of Veterans Affairs that can be used towards: 

  • The purchase of a home. 
  • The purchase of a manufactured home and/or lot. 
  • Building a home. 
  • Simultaneously purchasing and improving a home. 
  • Home improvements that will make the home more energy efficient. 
  • Refinancing an existing loan. 

How to Review VA Home Loan Benefits

There are several VA home loan benefits that qualifying service members and veterans can take advantage of, including but not limited to: 

  • No down payment requirements on purchases where the sale price does not exceed the appraised value. 
  • No private mortgage insurance premium requirements, which are common in other types of government loan programs, such as FHA or USDA loans. 
  • Reduced or limited closing costs. 
  • No penalty for paying off your loan early. 

VA home loan rates are also often lower than that of a traditional mortgage as a portion of your loan is backed by the Department of Veterans Affairs. By guaranteeing a portion of your loan, the risk to the lender is significantly reduced. 

Learn About the Types of VA Home Loans Available

The Department of Veterans Affairs offers several loan programs to qualifying veterans and service members. Therefore, it is worth taking the time to review these types of loans before submitting an application in order to apply for the loan program that is right for you. 

About a Purchase Loan

A purchase loan is one of the most common types of VA loans. A purchase loan will assist you in purchasing a home while obtaining a competitive interest rate that is often far lower than what a traditional mortgage may be able to offer. 

About the Interest Rate Reduction Refinance Loan (IRRRL)

An IRRRL may be able to assist you in obtaining a lower interest rate on an existing VA home loan, specifically if you wish to refinance a VA adjustable rate mortgage into a fixed rate mortgage. In doing so, you can potentially save far more over the life of your loan. 

About a Cash-Out Refinance Loan

This loan program is used to refinance a non-VA loan into a VA loan. It can also be utilized if you are interested in cashing out home equity in order to pay off other types of debt or make improvements to a home. 

About the Native American Direct Loan (NADL)

The Native American Direct Loan program assists Native American Veterans with the construction, purchase, improvement or refinancing of a home on Native American trust lands. In addition to standard eligibility requirements, NADL can only be used if your tribal organization participates in the VA direct loan program. 

Understanding VA Home Loan Requirements 

VA home loan requirements must be met before you can receive benefits from one of the VA home loan programs.  While some requirements may differ based upon the program that you intend to apply for, general requirements include: 

  • Service-length related qualifications. 
  • Eligible service statuses, including active-duty military personnel and veterans who were discharged under conditions other than dishonorable. 
  • The home that you wish to build, refinance or purchase must be for your own personal occupancy. 
  • Adequate credit score and history. 
  • Adequate debt-to-income ratio. 

You may qualify for an exemption of standard service-length related qualifications if you were discharged due to:

  • Hardship. 
  • A service-connected disability. 
  • Certain medical conditions. 
  • The convenience of the government. 
  • A reduction in force. 

You may qualify for VA home loan benefits as the surviving spouse of a veteran if any of the following apply: 

  • You are an un-remarried spouse of a veteran who either died from a service-connected disability or died while in service.
  • You are the spouse of a service member who is currently a prisoner of war or missing in action. 
  • You are the surviving spouse of a service member or veteran that is currently in receipt of Dependency and Indemnity Compensation (DIC) benefits in a case where the veteran’s death was not service-connected. 

How to Find VA Loan Lenders and Submit an Application

You will need to apply through an approved VA loan lender unless you are applying for a Native American Direct Loan. The NADL program is the only VA loan program where the Department of Veterans Affairs will be your lender. All other loan programs must be applied for through an approved lender as the VA will only guarantee a portion of the loan. 

There is no maximum VA home loan amount, as the Department of Veterans Affairs does not limit the amount of money that you may borrow. Instead, loans that are over $144,000 will only receive a maximum of 25 percent of the VA loan limit for the county. Maximum loan amounts will be determined by your lender, credit score, credit history, income and debt-to-income ratio.

Your lender can assist you in applying for a Certificate of Eligibility. Alternatively, you can apply for a certificate prior to visiting an approved lender online, by mail or by visiting your local VA office. You may still qualify for a VA home loan with bad credit, however, it is worth knowing that your interest rate on your mortgage is determined by your credit score, income and debt-to-income ratio. 

Once you have been approved for a VA home loan, your lender will be able to provide you with information on your maximum loan amount. Once approved, the process of obtaining or building a home will follow the same course as a traditional mortgage. For example, if purchasing a home, you will need to work with a licensed real estate agent to find the home you wish to purchase and complete that purchase.