. . . . . . . . . . . . . . . . . . . . . . . . . . Chris DeLoach . . . 843-270-1272 . . . . . . . . . . . . . . . . . . . . . . . .

Certificate of Eligibility

VA's Home Loan Program is for veterans and active duty military personnel  and certain members of the reserves and National Guard.  VA's program provides an excellent product and benefit.

The VA allows a veteran who qualifies to purchase a primary residence without putting money down towards the sales price (as long as the sales price does not exceed the appraised value).  Veterans do, however, need money towards closing costs and the earnest money deposit. 

• There is no Private Mortgage Insurance

• Veterans must meet credit standards but loans are not “score driven”

• The VA does not have a maximum loan amount.  However, lenders do sell loans on the secondary mortgage market, so they will generally limit loans to the VA limit for the county where the property is located. 

• The veteran does have to qualify (income and credit).

• The veteran does have to occupy the home as their primary residence.

• The veteran does not have to be a first time home buyer and may reuse his/her benefit.

• The lender, not VA, sets the interest rate and discount points  so these may vary from lender to lender.

• There is no private mortgage insurance; but, the VA does charge an up-front VA funding fee (which may be financed).  The exception to this is that if a veteran is in receipt of VA service connect disability payments each month. In this case, he or she does not have to pay a VA funding fee.

• The seller can pay for closing costs.  There is a requirement that seller concessions do not exceed 4%. Certain items are considered as part of the concession; i.e., payment of pre-paids, VA funding fee, payoff of credit balances or judgments on behalf of the veteran, and funds for temporary buydowns (not discount points).

• The veteran is not allowed to pay for the wood destroying insect (termite) report (CL-100) ; it is generally paid by the seller.

• VA does not approve the majority of loans.  The majority of transactions are handled directly by the lender with little VA intervention.

How much can the veteran afford (and other important factors)?

The VA uses two methods for qualification purposes.  The primary method of evaluating a veteran's income is the residual income method.  Under this method, the underwriter determines that a veteran has sufficient income to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments.  The VA also uses a debt-to-income ratio method like many programs.  However, VA uses only one ratio which is the ratio of total debt (both housing and other debt) to income. 

Steps in the Process of a VA Home Loan:

1. The veteran selects a home they are interested in.  The purchase and sales agreement should contain a VA option clause

2. Veterans may also apply for a certificate of eligibility prior to looking for a home or contacting a lender.  Please review our site for information on certificates of eligibility and a listing of lenders.

3. The veteran contacts a lender to apply for the loan.  At this point, if the veteran has not already obtained his/her certificate of eligibility, they will need to.  The lender may be able to obtain it off the internet or the veteran may have to complete a form and send it to the eligibility center.  In either case the lender will be able to assist in the procedures of how to obtain a certificate of eligibility.  The lender will complete a loan application and gather supporting documentation, i.e., paystubs and bank statements.  An important item for veterans to know is that lenders set their own interest rates, discount points and closing points.

4. The lender will "process" (develop) all credit and income information.  Lenders are allowed to use VA approved automated underwriting systems.  The lender will also order a VA appraisal.  The VA's appraisal is not a home inspection or a guaranty of value.  It is an estimate of the market value as of the date the inspection is made comparing it to similar homes that have recently sold in that area.  Although the appraiser does look for obviously needed repairs, the VA does request that appraisers not address cosmetic items.  The VA does not warrant the condition of existing homes.  The appraiser is a licensed individual who does not work for VA but is chosen by VA to assure his/her review is unbiased in any way.  The lender can not request which appraiser to use as they are assigned on a rotation basis.

5. Upon receipt of the appraisal and all supporting documentation on credit, income and assets, the lender will "underwrite" the loan.  It is the lender who reviews all the data collected and decides if the loan should be granted, developed for additional data or if the veteran does not qualify and must be denied.  Although VA does "underwrite" some loans, it is very rare.  The decision on whether or not to approve the loan is generally made by the lender.

6. The final step for loans that meet VA regulations and guidelines is the loan "closing" (when the transfer actually takes place). 

Apply online.  Go to the eBenefits portal (http://www.ebenefits.va.gov) and click on the My eBenefits tab towards the top, on the left side.  It will open a screen with several benefit areas.  On the bottom right of the screen is the Housing tab.  You will need login credentials to request a Certificate of Eligibility (COE).  If you have them, enter your Username and Password, if you need to request login credentials, you can simply click on the "Request/Activate a DoD Self-Service Logon" link which is shown below the area where you logon.

Military Service Requirements for VA Loan Eligibility

Note:  Applications involving other than honorable discharges will usually require further development by VA.  This is necessary to determine if the service was under other than dishonorable conditions.

Wartime - Service During:

• WWII: 9/16/1940 to 7/25/1947
• Korean: 6/27/1950 to 1/31/1955
• Vietnam: 8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Peacetime - Service during periods:

• 7/26/1947 to 6/26/1950
• 2/1/1955 to 8/4/1964
• 5/8/1975 to 9/7/1980 (Enlisted)
• 5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability.

Service after 9/7/1980 (enlisted) or 10/16/1981 (officer)

If you were separated from service which began after these dates, you must have:

• Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or
• Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensable service-connected disability;
• Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.

Gulf War - Service during period 8/2/1990 to date yet to be determined

If you served on active duty during the Gulf War, you must have:

• Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or
• Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or
• Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

Active Duty Service Personnel

If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

Selected Reserves or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

• Were discharged with an honorable discharge, or
• Were placed on the retired list, or
• Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or
• Continue to serve in the Selected Reserves

Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability.

You May also be determined eligible if you:

• Are an unremarried spouse of a veteran who died while in service or from a service connected disability, or
• Are a spouse of a serviceperson missing in action or a prisoner of war

Note:  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility.  VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.

Eligibility may also be established for:

• Certain United States citizens who served in the armed forces of a government allied with the United States in WW II.
• Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.