VA Home Loan FAQs

Eligibility (Part 1)

Military Service Requirements for VA Loan Eligibility:

Note:  Any applications by veterans who were discharged under anything besides honorable conditions will probably take longer than normal to process. This extra time is needed to research if your discharge was for anything except dishonorable conditions.

Wartime – If you served during:

To be eligible, at least 90 days of service on active duty is required, as well as not having been discharged for dishonorable conditions. For those having less than 90 days of service during these time periods, eligibility can also be earned through a service-related disability discharge.

Peacetime – If you served during:

To be eligible, at least 181 days of service on active duty is required, as well as not having been discharged for dishonorable conditions. For those having less than 181 days of service during these time periods, eligibility can also be earned through a service-related disability discharge.

Service after 9/7/1980 (Enlisted) or 10/16/1981 (Officer)

If your service ended after the dates listed above, you need to have one of the following qualifications to be eligible:

• Completion of at least 24 months of continuous active duty or the entire time period you were required to serve in active duty (at least 181 days) and a non-dishonorable discharge
•  Completion of no less than 181 days in active duty and a discharge because of 10 USC 1173 (Hardship) or 10 USC 1171 (Early Out), or because of a service-related disability.
• Discharge with less than 181 days serviced because of a service-related disability.
• Eligibility can also be earned for discharge from active duty because of an involuntary reduction in force, specific medical conditions, or governmental suitability. 

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

If you were on active duty during the Gulf War, you must meet one of the following requirements to be eligible:

• Completion of at least 24 months of continuous active duty or the entire time period you were required to serve in active duty (at least 181 days) and a non-dishonorable discharge
• Completion of no less than 181 days in active duty and a discharge because of 10 USC 1173 (Hardship) or 10 USC 1171 (Early Out), or because of a service-related disability.
• Discharge with less than 181 days serviced because of a service-related disability.
•  Eligibility can also be earned for discharge from active duty because of an involuntary reduction in force, specific medical conditions, or governmental suitability.

Active Duty Service Personnel

If you are currently serving regular duty (not active duty for training), you must have served 181 days (90 days during the Gulf War) to be eligible. The only exception to this is if you have been discharged or separated earlier, from another period of serving active duty.

Selected Reserves or National Guard

If you do not meet any of the conditions listed above, you can also be eligible if you were a member of an active unit (went to to all required weekend drills and two-week-long training active duty) in the Selected Reserves or National Guard for at least six years. You also must have one of the following qualifications:

If you have less than six years of service, you are eligible if your discharge was for a service-related disability.

Un-Remarried Surviving Spouses/Spouses of POW or MIA Servicepeople:

Either of the following conditions can also qualify you for eligibility:

• Being an un-remarried spouse of a veteran that died in service or from a service-related injury
• Being a spouse of a missing in action (MIA) or prisoner of war (POW) serviceperson

Note:  Any surviving spouse that becomes remarried on or after reaching the age of 57, on or after December 16, 2003, can be eligible for a home loan. But to be eligible, this spouse needs to apply no later than December 15, 2004 to be eligible. Any applications received after that date from spouses who remarried before December 6, 2003 will be denied.

You can also be eligible if you:

• Were a U.S. citizen who was part of the armed forces of any government allied in WWII with the U.S.
• Were a member of any of the following: officers in the Public Health Service, United States Military, Air Force, or Coast Guard Academy cadets; United States Naval Academy seamen;  the National Oceanic & Atmospheric Administration officers, merchant seamen with WWII service; and others.

Eligibility Frequently Asked Questions

Frequently asked questions about who is eligible for a VA loan and about reuse of eligibility for another VA loan.
Q: How do I apply for a VA guaranteed loan?

A: Any mortgage lender who is part of the home loan program will accept your application. Eventually, you will need a Certificate of Eligibility from VA to confirm your eligibility to the lender.

Q: How do I get a Certificate of Eligibility?

A: To get a Certificate of Eligibility, complete VA Form 26-1880, Request for a Certificate of Eligibility for Home Loan Benefits. The completed VA Form 26-1880 needs to be submitted to the Atlanta Eligibility Center, along with proof of military service. Eligibility can be determined without this proof of service, but to make the process smoother, it is recommended to submit this proof of service.

Q: Can my lender get my Certificate of Eligibility for me?

A:  Your lender can obtain your Certificate of Eligibility for you through the Web LGY system, which most lenders should be able to access. Through the Web LGY system, your eligibility can be established, and an online Certificate of Eligibility can be issued  in a short time.    Only cases that VA has enough information in their system for can be processed through Web LGY. However, you should  still discuss this method of obtaining a certificate with your lender.

Q: What is acceptable proof of military service?

A:  If you’re still actively serving on duty, it is required that you include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters that provides identification for you, your Social Security number, and the entry date for your current active duty period and the duration of any time lost.

If your discharge from regular active duty occurred after January 1, 1950, include a copy of DD Form 214, Certificate of Release or Discharge from Active Duty, with your VA Form 26-1880. If your discharge occurred after October 1, 1979, please include DD Form 214, copy 4. An original copy of DD-214 is not necessary. A photocopy is sufficient.

If your discharge was from the Selected Reserves or the National Guard, it is required that you include copies of adequate documentation that shows you have at least six years of honorable service. If your  discharge was from the Army or Air Force National Guard, either NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting or its equivalent, should be submitted. If your discharge was from the Selected Reserves, you may submit a copy of your latest annual points statement and evidence of honorable service. Because there is no one form used by the Reserves or National Guard that is similar to DD Form 214, you will need to provide adequate evidence that you have honorably served for six years.

If you still belong to the Selected Reserves or the National Guard, it’s required that you include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or  commander of your unit or higher headquarters that provides the time period  for which you have been a member of the Selected Reserves. You will need to show six years of honorable service.

Q: How can I obtain proof of military service?

A: You need to submit Standard Form 180, Request Pertaining to Military Records, which is used to apply for proof of military service, no matter if you were on regular active duty or in the Selected Reserves. VA doesn’t handle this form. Instead, it should be completed and mailed to the appropriate custodian of military service records. The back of the form contains instructions for finding the correct forwarding address.

Q: I have already obtained one VA loan. Can I get another one?

A: You can reuse eligibility, depending on certain conditions. If your previous VA loan has been paid off and the property has been disposed of, your eligibility can be renewed. Also, but only once, your eligibility can be renewed if your previous VA loan is fully paid, but you are still owner of the property.  In either of these circumstances, you need to send a completed VA Form 26-1880 to our Atlanta Eligibility Center for your eligibility to be restored.  For faster processing, it is recommended that  you provide evidence that your previous loan is fully paid, and, if applicable, that your property is no longer in your posssession. This evidence can be a paid-in-full statement from the former lender, or a copy of the HUD-1 settlement statement completed in connection with a sale of the property or refinancing of the prior loan.

Q: I sold the property I obtained with my prior VA loan on an assumption. Can I get my eligibility restored to use for a new loan?

A: In this situation, you can only have eligibility restored if the qualified assumer meets the following conditions: they are also an eligible veteran, and they have agreed to substitute their available eligibility for yours. If these conditions aren’t met, you can’t have eligibility restored until the assumer pays off the VA loan.

Q: My prior VA loan was assumed, the assumer defaulted on the loan, and VA paid a claim to the lender. VA said that it wasn’t my fault and waived the debt. Now I need a new VA loan but I am told that the eligibility I used cannot be restored. Why is this?

or

Q: My prior loan was foreclosed on, or I gave a deed in lieu of foreclosure, or the VA paid a compromise (partial) claim. Although I was released from liability on the loan and/or the debt was waived, I am told that I cannot have the eligibility that I used restored. Why is this?

A: In both these cases, even though the VA released you from your debt, the government still lost money on the loan. According to the law, your used eligibility cannot be restored until the loss is fully repaid.

Q: Only a portion of my eligibility is available at this time because my prior loan has not been paid in full, even though I don’t own the property any more. Can I still obtain a VA-guaranteed home loan?

A: This is possible, but depends on certain conditions. If part of your eligibility has been used already, and this part is not able to be restored yet, only the part of the eligibility that remains could be used. You will have to meet with a lender to find out if your remaining balance is enough for your loan amount and if a down payment will be required.
Q: Is the surviving spouse of a deceased veteran eligible for the home loan benefit?

A: If you are un-remarried and the surviving spouse of a veteran who was killed during active duty or because of a service-related disability, then you are eligible to receive the home loan benefit. To apply for this, get in touch with our Atlanta Eligibility Center. Also, if you are a surviving spouse that had a VA home loan with prior to your spouse’s death, you are eligible to receivea VA-guaranteed interest rate reduction refinance loan. Call or email our Atlanta Eligibility Center for additional information.

Note:  Any surviving spouse that becomes remarried on or after reaching the age of 57, on or after December 16, 2003, can be eligible for a home loan. But to be eligible, this spouse needs to apply no later than December 15, 2004 to be eligible. Any applications received after that date from spouses who remarried before December 6, 2003 will be denied.

Q: Are the children of a living or deceased veteran eligible for the home loan benefit?

A: No, the children of an eligible veteran, whether the veteran is living or deceased, are not eligible for the home loan benefit.

 Pre-Loan

Q: What is a VA guaranteed home loan?

A: Private lenders (banks, savings & loans, or mortgage companies) give VA-guaranteed loans to qualified veterans for the purpose of purchasing a residence that they personally will occupy.  A guaranty exists so if for any reason, you don’t repay the loan, the lender is protected from losing money. The guaranty is in place of the down payment that a lender would normally receive, which protects them from losing money. The guaranty provides you with favorable financing terms as well.

Q: What is pre-purchase counseling and why is it helpful?

A: Pre-purchase counseling provides information about how the home-buying process works, who is involved in the process, and how to manage debt.  This counseling is designed to make sure you have all the information you need about home-buying. This counseling is not required, but it is strongly recommended that you attend it. This counseling is usually free. A good place to find information for first-time homebuyers is Ginnie Mae.

If you would like to find a housing counseling office, you can either call the Department of Housing and Urban Development (HUD) at (800) 569-4287, or visit their website.

Q: Does my entitlement guarantee that I will get a home loan?

A: No. A lender won’t grant a loan if it violates their lender policies, and VA cannot force them to do so. Lenders also are required to abide by VA income and credit standards. If a lender refuses you for a loan, your only option is to try other lenders.

Q: How much is my entitlement?

A: The basic amount you are given as an entitlement is $36,000. If your loan is over $144,000 for buying or constructing a home, you might be eligible to receive an additional amount up to 25 percent  of what the VA county loan limit for a single family home is. These VA county loan limits, which can change annually, are available at this link.  A loan limit is how much a qualified veteran who is entitled to the full amount can borrow without being required to make a down payment.

Q: How do I get a Certificate of Eligibility?

A:  Your lender can obtain your Certificate of Eligibility for you through the Web LGY system, which most lenders should be able to access. Through the Web LGY system, your eligibility can be established, and an online Certificate of Eligibility can be issued  in a short time.    Only cases that VA has enough information in their system for can be processed through Web LGY. However, you should  still discuss this method of obtaining a certificate with your lender.

You will need to complete VA Form 26-1880, Request for a Certificate of Eligibility for Home Loan Benefits. The completed VA Form 26-1880 needs to be submitted to the Atlanta Eligibility Center, along with proof of military service. Eligibility can be determined without this proof of service, but to make the process smoother, it is recommended to submit this proof of service.

Q: How do I obtain a VA Home Loan?

A: Here are the steps:

ñ Find a home and meet with the seller or selling agent to discuss it. They will give you a purchase contract to sign if your VA home loan is approved.

ñ Find a lender, show them your Certificate of Eligibility if available, and fill out a loan application.  Your lender can also get a Certificate of Eligibility for you.

ñ Your lender will go through all of your credit and income information. Additionally, they will notify VA to choose a licensed appraiser to calculate what a reasonable value is for the property. Then, they will issue a Certificate of Reasonable Value.

Note: Unless the seller you are dealing with agrees to pay for the credit report and appraisal, you will be responsible for these charges.

•  Your lender will soon notify you what they have decided about the loan. If the established value and your credit and income are sufficient, then you will most likely be approved.
• You (and your spouse, if applicable) need to go to the loan closing. The lender or closing attorney will discuss all loan terms and requirements , and where and how you will need to pay your monthly payments. You (and your spouse, if applicable) will need to sign the note, mortgage, and other related papers.

Q: What can VA not do?

A: VA does not ensure that your home won’t have any defects. They can only provide your home loan. It’s your job to ensure your own satisfaction with what you are purchasing. The appraisal by VA is not supposed to be an official “inspection.” VA recommends that you have a qualified residential inspection service visit the property before you commit to a legal purchase agreement.

If you build a home, VA cannot force the builder to fix any problems with the construction, although VA can suspend a builder from belonging to the home loan program if they do not fix these problems.

Also, VA cannot ensure that you are making a good investment, or provide legal services.

Q: Should I have my home checked for Radon?

A: While Radon testing is not required, it is encouraged.  For information on Radon and how to test for it, please read the Environmental Protection Agency guide found at this link.

Q: Is a guaranteed loan a gift?

A: No, it must be repaid, just as you must repay any money you borrow. If you fail to make the payments you agreed to make, you may lose your home through foreclosure.

Q: Can I get a loan for a home outside of the United States?

A: Unfortunately, the law only allows VA to guarantee loans on property in the United States or its territories or possessions.

Q: Can I get a VA loan if I have had a bankruptcy in the last few years?

A: The fact that you and/or your spouse have been adjudicated as bankrupt does not in itself disqualify you for a VA home loan. The following rules apply:

• If the bankruptcy was discharged more than two years ago, it may be disregarded
• If the bankruptcy was discharged within the last one to two years, it is probably not possible to determine whether you and/or your spouse are a satisfactory credit risk unless both of the following requirements are met:
• You and/or your spouse have reestablished satisfactory credit, and
• The bankruptcy was caused by circumstances beyond your and/or your spouse’s control (such as unemployment, medical bills, etc.)
• If the bankruptcy was discharged within the past 12 months, it will not generally be possible to determine that you and/or your spouse are satisfactory credit risks.

Q: Why do I have to pay a fee for a VA home loan? Since I paid a fee for my first loan, why is there a larger fee for my second loan?

A: The VA funding fee is required by law. This fee is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers. The funding fee for second-time users who do not make a down payment is slightly higher. The requirement of a higher fee for second-time use is based on the fact that these prior users have already had a chance to use the benefit once, and also that they have had time to accumulate equity or save money towards a down payment. First- and second-time users who make a down payment of at least 5 percent pay a reduced funding fee of 1.5 percent, which is the same as first-time users making the same down payment. For a 10 percent down payment, the fee drops to 1.25 percent. The effect of the funding fee on a veteran’s financial situation is minimized since the fee may be financed in the loan. National Guard and Reservist veterans pay a slightly higher funding fee percentage. To determine your exact funding fee percentage, please review the funding fee table.

Q: I want to buy a house with a VA loan. Do I need to actually occupy the property?

A: The law requires that you certify that you intend to occupy the property as your home. This requirement is considered satisfied if you actually intend to occupy the property as your home, and, in fact, so occupy it when the loan is closed, or within a reasonable time afterward.

Q: I am a single veteran stationed overseas and want to buy a home in my hometown. My friends who are married have done this, and  have their spouses occupy the property in their place, but VA says I can’t have my parents or other relatives occupy the property on my behalf. Isn’t this discrimination against single veterans?

A: The law specifically states that occupancy by the veteran’s spouse satisfies the personal occupancy requirement. The law makes no provision for occupancy by any other relatives as a substitute for personal occupancy by the veteran.

Q: Can a veteran obtain a VA loan with a non-veteran who is not his or her spouse?

A: Yes, but the guaranty is based only on the veteran’s portion of the loan. The guaranty cannot cover the non-veteran’s part of the loan. You should consult lenders to determine whether they would be willing to accept applications for joint loans of this type. Lenders that are willing to make these types of loans will likely require a down payment to cover risk on the unguaranteed, non-veteran’s portion of the loan. Unlike other loans, the lender must submit joint loans to VA for approval before they are made.

Both incomes can be used to qualify for the loan. However, the veteran’s income must be sufficient to repay at least that portion of the loan related to the veteran’s interest in (portion of) the property and the non-veteran’s income must be adequate to cover the rest of the loan.

Q: If a veteran dies before the loan is paid off, will the VA guaranty pay off the balance of the loan?

A: No. The surviving spouse or other co-borrower must continue to make the payments. If there is no co-borrower, the loan becomes the obligation of the veteran’s estate. Mortgage life insurance is available but must be purchased from private insurance sources.

Post-Loan

Q: My home was appraised by VA and now I am having problems with its condition. Wasn’t the appraisal an inspection of the property, and can’t VA help me with these problems?

A: Although the VA fee appraiser must view the property from both the exterior and interior to determine its overall condition, the appraisal process is not intended to be an “inspection” of the property. While the appraiser is an experienced observer, and is required to recommend needed repairs based upon his or her observations while completing the appraisal, the appraiser is not expected to recommend cosmetic repairs, ensure that mechanical, electrical and plumbing systems work properly, climb on the roof, or perform other similar tasks. VA cannot guarantee that all defective conditions will be seen by the appraiser, or that the property will otherwise be satisfactory to the buyer in all respects, and we have no authority to assist veteran homeowners with the correction of defects in existing homes. VA encourages homebuyers to ensure their own satisfaction that the home they intend to purchase is in an acceptable condition.

Q: I purchased a newly constructed home that was inspected by VA (or HUD/FHA) during construction and I have complaints that the builder has not taken care of. Is there anything VA can do to help me with this?

A: If the new home was inspected by a fee compliance inspector assigned by VA or HUD during construction, VA has complaint processing procedures that are used to attempt to get the builder to correct construction defects that the VA determines are the builder’s responsibility. A complaint must be registered with VA within the first year of ownership. Ultimately, VA does not have the authority to force a builder to make corrections to a property. Also, some problems may be determined by VA to be within minimum standards of acceptable building practice. In such cases, VA will not look to the builder for correction. However, when builders refuse to correct items which VA determines are their responsibility to correct, VA will take administrative sanctions against them and refuse to do further business with them. In the end, some veterans may still need to pursue legal action against the builder.

Q: My lender has increased my payments to the escrow account for taxes and insurance. What can I do?

or

Q: The amount my lender is collecting for taxes and insurance doesn’t seem right. What can I do?

A: VA does NOT require lenders to maintain escrow accounts. VA does require that lenders ensure that the property is covered by sufficient hazard insurance at all times and that property taxes are paid. Most lenders decide to use escrow accounts to do this, but they are not required to do so by VA, and VA has no standards governing them. Lenders are governed by RESPA, which is administered by the US Department of Housing and Urban Development (HUD). For more information, go here.

Q: Does having a VA loan limit a veteran’s right or ability to sell the property?

A: No. A veteran may sell the property to a veteran or non-veteran at any time. However, if the loan was closed after March 1, 1988, and it will be assumed by someone else, the qualifications of the assumer must be reviewed and approved by the lender or by VA.

Q: When a veteran sells the property to someone who will assume the existing VA loan, is the veteran released automatically from personal liability for repayment of the loan?

A: No. If the loan was closed after March 1, 1988, the lender or VA must be notified and a request must be made to approve the assumer and grant the veteran release from their liability. If the loan was closed prior to March 1, 1988, the loan may be assumed without approval from VA or the lender. However, the veteran is strongly encouraged to request a release of liability from VA in order to avoid owing a debt to the government if the loan assumer (or a subsequent assumer) fails to pay the loan.

Q: If a veteran obtains a release of liability, is restoration of entitlement automatic?

A: No. The assumer must not only qualify from a credit and income standpoint, but he or she must be a veteran with sufficient entitlement to substitute for that used by the original veteran in obtaining the loan, and they must also meet occupancy requirements.

Q: If a veteran has trouble repaying the loan, what should he or she do?

A: It is best to talk with the lender as soon as possible to explain why the payments are late and when and how those late payments will be made. If there was a job loss, divorce, or other serious problem, and the regular monthly payments cannot be made, then it may be best to sell the home to avoid foreclosure. VA may be able to assist in arranging a repayment plan or another alternative to foreclosure. VA offers home loan counseling through its nine Regional Loan Centers (RLCs). Call our toll-free number (800-827-l000) to request a call-back from a Loan Service Representative or click here for the phone number and address of the RLC closest to you.

Q: What are VA refunds?

A: When VA refunds a loan, the loan is purchased from the private lender. VA only refunds a loan when the veteran has had problems making the payments due to circumstances beyond his or her control, and when these problems have improved so that payments can now be made or will be made in the near future, but the loan holder is not willing to wait before taking action to terminate the loan. Refunds are rare because most lenders prefer to work out the problem, if at all possible, rather than selling the loan to VA and thereby giving up the right to future income from that loan.

Q: How does a VA compromise claim payment work?

A: When a veteran attempts to sell his or her home and the expected proceeds from the sale are not enough to pay off the existing loan, and the veteran has no other source of funds to complete the transaction, a VA compromise claim pays the difference. As with any claim payment by VA, the veteran usually remains liable to VA for the amount of the claim payment. However, the compromise claim is usually less than the claim which would have been payable if the sale had fallen through, the veteran had failed to make the loan payments, and the lender had foreclosed on the loan.

Q: If a veteran dies before the loan is paid off, will the VA guaranty pay off the balance of the loan?

A: No. The surviving spouse or other co-borrower must continue to make the payments. If there is no co-borrower, the loan becomes the obligation of the veteran’s estate. Mortgage life insurance is available but must be purchased from private insurance sources.