Who Qualifies for a VA Loan?

The U.S. Department of Veterans Affairs (VA) home loan program is one of the most popular benefits the VA provides to active duty and retired members of the U.S. military. According to the Department of Veterans Affairs, in the first quarter of 2023, the VA guaranteed 104,000 loans for a total of more than $36 billion.

But what is a VA loan, exactly? It’s a mortgage backed by the VA, which means the government covers some or all losses if your home is foreclosed. Because of these guarantees, lenders typically offer better terms on VA-backed loans than conventional mortgages.

For many veterans, these loan options are extremely helpful in the path to homeownership. Read on to learn who qualifies for a VA loan, as well as the different kinds of VA home loans and requirements for eligibility.

Table of contents

• Who qualifies for a VA loan?
• VA Loan Benefits
• VA loan limits and restrictions
• What are the financial requirements for a VA loan?
• What is the lowest credit score for a VA loan?
• Types of VA loans
• How do I get my VA Certificate of Eligibility?
• How many times can you use a VA loan?
• Who qualifies for a VA loan FAQs

Who qualifies for a VA loan?

The VA loan program is open to active duty members and veterans of all branches of the military (Army, Navy, Marines and Air Force), as well as members of the Reserves, Coast Guard and National Guard. In general, most people who have served since September 15, 1940, will qualify, though the length of service requirements vary.

Cadets and midshipmen studying at military academies such as West Point or the Naval Academy are also eligible, as are certain officers of the National Oceanographic and Atmospheric Administration and members of the Public Health Service. Some surviving military spouses can also apply for a VA loan.

In addition to service time requirements, other things may affect whether you qualify for a VA loan. Contact your local VA center for more information on full VA loan eligibility and criteria.

Requirements for veterans:

If you served:

• During war time — 90 consecutive days of active duty service or less if you were discharged with a service-related disability

• Between August 2, 1990, and today (Gulf War) — 24 continuous months or at least 90 days of active duty service or, at least 90 days of service if you were discharged due to a hardship or reduction of force or, less than 90 days if you were discharged due to a service-related disability

• During peacetime — 181 consecutive days of active duty service or less if you were discharged with a service-related disability

• Between September 8, 1980, and August 1, 1990 — 24 continuous months or at least 181 days of active duty service

• If you separated from the service after September 7, 1980 — 24 continuous months or at least 181 days of active duty service, or at least 181 days of service if you were discharged due to a hardship or reduction of force, or less than 181 days if you were discharged due to a service-related disability

Requirements for active duty service members

• Currently an active duty service member for 90 continuous days

Requirements for National Guard members and Reserves

● Between August 2, 1990, and today — 90 days of active duty service

● Any time period — 6 years of service in the Select Reserves or National Guard where you participated in drills but were not actively deployed plus one of the following:

• You received an honorable discharge

• You were placed on the retired list

• You were transferred to the Standby Reserve or the Ready Reserve after serving honorably

• You continue to serve in the Select Reserve

Requirements for surviving spouses

You may qualify for a VA mortgage if you are a surviving spouse of an eligible member of the Armed Forces and you meet at least one of the following criteria:

• Your spouse is missing in action

• Your spouse is a prisoner of war

• Your spouse passed away while in service or from a service-related disability

• Your spouse was totally disabled and passed away

• You must not have remarried before December 16, 2003, or on or after your 57th birthday.

How do I get my VA Certificate of Eligibility?

The VA is not a mortgage lender per se. Instead, private lenders manage the loan application process and originate the loan, and the VA guarantees a portion of it. For the lender to issue a VA-backed loan, you must prove that you meet the eligibility requirements. The VA Certificate of Eligibility (COE) serves as that proof.

You can request your COE directly from the Veterans Administration through the department’s eBenefits portal. Many VA loan lenders will help you apply for your COE if you need assistance. While having your COE ahead of time is useful, you don’t need it before applying for a VA loan.

VA Loan Benefits

VA loan benefits range from no down payment for qualified borrowers, no private mortgage insurance (PMI) required and significantly fewer fees for loan processing. Plus, credit score requirements for VA home loan borrowers are typically less rigid than the standards for conventional loan borrowers.

No down payment required

No down payment is required for VA home loans, so long as you meet the lender’s requirements, such as credit score and annual income minimums.

However, there are some situations in which a down payment may be helpful, or even required.

For example, there is no minimum credit score requirement set by the VA, but lenders often favor borrowers with credit scores of 620 and higher. Residual income (the money remaining after paying existing debts and living costs) is also considered. You may be asked to put money down on your loan if you don't meet a lender's requirements.

Additionally, just like with a conventional loan, lenders consider down payments as evidence of your ability to repay the loan. This means a downpayment could get you a better interest rate on your mortgage.

No private mortgage insurance (PMI)

Conventional home loans require private mortgage insurance (PMI). On average, PMI costs between 0.5% and 5% of the home’s cost each month.

VA loans don’t require private mortgage insurance. Instead of insurance, the government requires a mandatory VA funding fee that is based on the amount of money you borrow. Those disabled while in service aren’t required to pay this fee. This fee is intended to ensure that money is available to provide loans to future generations.

Low closing costs

While every loan comes with closing costs, the VA limits what fees lenders require veterans to pay when it's time to close on their loans. Home buyers with VA loans can also request that sellers pay for things like judgments, prepaid taxes, insurance and collections, up to 4% of the home’s cost.

Bankruptcy and foreclosure forgiveness

It takes seven years for a Chapter 13 bankruptcy filing and outstanding debts to disappear from your credit history. This can make it hard to qualify for a traditional home loan. With a VA home loan, you can borrow just two years after filing for bankruptcy, short sale or foreclosure. Some lenders permit borrowing just one year after filing for Chapter 13 bankruptcy.

VA loan limits and restrictions

VA loan limits provide unique borrowing opportunities to those who served in the U.S. Armed Forces and their family members, but the VA places some restrictions on what these loans can be used for. As with other types of mortgages, interest rates, monthly payments and other terms can vary among the best VA lenders, so it's important to research your options before choosing a lender.

No investment properties

VA loans are intended to help veterans and their families purchase primary residences. They can’t be used for real estate investment property. If you or your family plans to live in the home, you can qualify for a VA loan. If you plan to rent the house out or fix it up and sell it for a profit, you’ll need to find another option for your home loan.

No international properties

Borrowers can’t use VA funds to purchase international properties. The property you buy with your VA home loan must be in the United States or a U.S. territory, including American Samoa, Guam, the Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands. All loans are run through the National Lending Mortgage Service, which will confirm that the home purchased with a VA loan meets the location requirement.

No commercial properties

VA loans aren’t intended for business use. You can’t take out a VA loan to buy or rent an office space, warehouse, storefront or other property used for a business.

Unimproved land

You can’t purchase farm ground or bare land with a VA loan. However, you can use a VA loan to purchase undeveloped land on which you will build a primary residence.

What are the financial requirements for a VA loan?

The VA loan application process works much like a conventional home loan. Your lender will evaluate your credit score, income, debt-to-income ratio and savings to evaluate your eligibility for a mortgage.

A good credit score will help you qualify for a lower interest rate, but it’s not the only determining factor. One of the advantages of VA loans is that they take a more holistic approach to determining your creditworthiness. Factors such as residual income and credit history will also play a part in the lender’s decision.

What is the lowest credit score for a VA loan?

The VA does not have a minimum credit score requirement. However, each VA lender will have its own minimum credit score and financial requirements that you’ll have to meet to get your loan approved.

Credit score requirements

While there is no government-mandated credit score requirement, some lenders set a minimum credit score. (In these cases, it’s often 620 or higher.) However, the VA requires that each lender base their decision on the applicant’s entire profile and VA form before declining a VA loan application.

Debt to income requirements

VA loans don’t have a set requirement for a borrower's debt-to-income (DTI) ratio. Still, a high DTI — especially if your credit score and other requirements aren’t up to the lender’s standards — can negatively affect your interest rate and the amount you’re permitted to borrow.

Types of VA loans

There are four types of VA loans. For all VA home loans, you need to meet the lender’s requirements, such as minimum credit score and annual income. You also need a Certificate of Eligibility. Choosing the right VA loan for you depends on your situation and how you go about getting the best VA loan rate.

Purchase Loan

Purchase loans are used to buy a home, improve a home, build one or make your current home more energy efficient. These loans offer low closing costs and better mortgage rates and terms and, for qualified borrowers, don't require a down payment.

Cash-out refinance loans

Cash-out refinance loans replace your existing loan with a new one. You can borrow more than you owe on your home and use the remaining cash for any purpose. The loan amount you qualify for could be up to 100% of your home value, depending on how much home equity you have.

Many lenders allow borrowers to refinance a non-VA loan with a VA-backed loan. This type of mortgage refinance can be a great way to consolidate and simplify debt, lower your monthly mortgage payment or get a better interest rate.

Interest rate reduction refinance loan (IRRRL)

An interest rate reduction refinance loan (IRRRL) is another type of loan that replaces your existing loan. However, you can only use an IRRRL to refinance a VA-backed loan. This type of mortgage refinance is a way to lower your monthly mortgage payments or get a fixed interest rate, as opposed to a variable interest rate, on your existing VA home loan.

Native American Direct Loan (NADL) program

Native American veterans and veterans married to Native Americans qualify for a Native American Direct Loan. NADL borrowers can build, buy, expand or renovate on federal trust (Native American reservation) land. You can get more than one loan through this program, and you can also refinance an existing NADL. Mortgage rates are low-interest and fixed for 30 years on these loans.

How many times can you use a VA loan?

There is no limit to how many times you can apply for or refinance a VA loan. However, there are situations where you may be required to make a down payment. It all has to do with your entitlement.

An entitlement is how much money the VA is willing to guarantee on a mortgage loan provided by a private lender. Entitlements may be $36,000 or more if the mortgage amount is less than $144,000. If the mortgage is greater than $144,000, the VA will guarantee 25% of the loan amount.

Think of the entitlement as a substitute for a down payment. The lender will receive a guaranteed amount of money in case you default on your loan.

Your COE will have the entitlement amount on it so the lender knows how much the VA will give them if you were to default. As long as you have entitlement left over, you can apply for another VA loan. If your entitlement balance is $0, however, you will have to make a down payment on a new loan.

Your full entitlement is restored once you’ve paid off a previous VA loan. If you are still paying off another loan, you may have a partial entitlement. You can also restore your full entitlement by refinancing to a different loan type or selling your home.

What are the types of entitlements?

Your entitlement amount is shown on your Certificate of Eligibility. This number does not reflect how much you can borrow; it indicates how much the VA guarantees repayment to the lender if you default on your VA loan.

There are three types of entitlements: full entitlement, partial entitlement (also called remaining entitlement) and bonus entitlement.

Full entitlement

You likely have full entitlement if you’re a first-time VA home loan borrower. With full entitlement, the VA will often offer $36,000 to the lender as a guarantee. For loans over $144,000, the VA will pay up to 25% of the loan amount. If you have full entitlement, the VA will not limit how much you can borrow. (However, lenders can limit the total loan amount based on your income or credit score.)

Partial entitlement

Partial entitlement means you’ve already used some of your entitlement and have yet to repay (or restore) the full entitlement. The remaining entitlement can be used for a loan that does not exceed your county’s loan limit. Your loan will be guaranteed up to 25% of the total minus the entitlement you’ve used.

Bonus entitlements

Bonus entitlements are intended for veterans in states where real estate is more expensive. They allow veterans to buy higher-priced homes. Bonus entitlements apply to homes over $144,000 but not more than the conforming loan limit of $510,400. In 2020, the VA removed the loan limit if a veteran's full entitlements remained intact. You can find entitlement amounts on the VA website.