Rules for VA Loans

The rules for obtaining a VA loan are different than rules for an FHA or conventional mortgage. There are a number of different caveats that govern eligibility. Depending on service era, time frames, financial situation and disability, you may or may not be entitled to certain benefits.

Eligibility--War Time

If you served during specific dates during World War II, the Korean War or in Vietnam with at least 90 days of active service and were discharged under anything other then dishonorable conditions you are eligible. Dates of eligibility are: World War II, Sept. 16, 1940 to July 25, 1947; Korean War, June 27, 1950 to Jan. 31, 1955; and Vietnam, Aug. 5, 1964 to May 7, 1975.

Eligibility--Peace Time

If you served during the following peace time dates with at least 181 days of active service and were discharged under anything other then dishonorable conditions you are eligible. If you served less than 181 days, you may still be eligible if discharged under terms of disability related to your service. Eligible dates are July 26, 1947 to June 26, 1950; Feb. 1, 1955 to Aug. 4, 1964; May 8, 1975 to Sept. 7, 1980 for enlisted men, May 8 1975 to Oct. 16, 1981 for officers.

Eligibility--Gulf War

Service during the period starting Aug. 2, 1990, through a yet-to-be-determined date is eligible. If on active duty during the Gulf War you must have completed 24 months of continuous active duty or the full time period (at least 90 days) of which you were called to active service and discharged under anything other then dishonorable conditions. In some cases you are eligible with less than 90 days served if discharged for disability, reduction in force, government reasons or various other medical issues.

Eligibility--Current and Reserve

If you are currently active duty, you are eligible after 181 days of active duty or 90 days during the Gulf War. Reserves and National Guard who are not eligible otherwise may be eligible if they have served a total of 6 years in reserves or National Guard.

Loan Qualifications

The veteran must supply a copy (not original document) of the DD 214 (Certificate of Release) to the selected VA lender if you are not currently active. If currently active, you must submit a statement of service that includes the base or command authority you are serving under and it is signed by the appropriate authority. This must include your Social Security number and date of service entry.

Loan limits vary by location. Check Resources for your area.

The maximum allowed debt-to-income ratio for a VA loan is 41 percent. However, in some cases where that ratio exceeds 41 percent, eligibility may still be granted.

There is not a set credit score number to qualify for a VA loan. Eligibility is determined by credit history of past payments and financial standing. Your loan officer will guide you through this process. A period of financial hardship does not automatically disqualify you.

The VA funding dee is required by law. It is calculated at 2.15 percent on a no down payment loan for first-time users. For second-time users, the fee is 3.3 percent for a no down payment loan. When making a down payment up to10 percent, the fee is lowered to 1.5 percent for first- and second-time users.

Exemptions from the funding fee are available for veterans receiving compensation for disabilities, surviving spouses of veterans who died in service, and veterans who would receive disability compensation if they did not receive retirement pay. The VA has the final say in regards to this. Contact the VA to see if you are eligible to have the fee waived.

References

• Veterans Benefits

Resources

• VA Loan Limits