By Larry Dandridge
This article will cover VA Home Loan eligibility, lender borrowing requirements, and the VA borrowing requirements, as well as other helpful information.
Eligibility
The VA’s “Home Loan Guaranty Buyer’s Guide,” dated April 2022, found at https://bit.ly/3B2o0hm, states, “Based on your service to the United States of America, you may be eligible for the VA Home Loan benefit. The (VA) is the only organization that can determine eligibility for a VA direct or VA-backed home loan benefit based on your length of service or service commitment, duty status, and character of service. Details for determining eligibility (including calculating credible years of service) can be found in Chapter 7 of the “M26-1 Guaranteed Loan Processing Manual” at https://bit.ly/3XKo8K6.”
Lenders’ borrowing requirements
You must meet your lender’s minimum or standards of credit, income, and any other requirements to approve a loan. The VA does not require a minimum credit score, but most lenders will use a credit score to help determine your interest rate and to lower risk. Typically, lenders may want borrowers to have a minimum credit score. Because different lenders have different requirements, you should shop for a lender that meets your needs.
VA’s borrowing requirements
The VA does not determine how much you can borrow. Unlike other loans, the VA requires you to have enough income remaining after paying your mortgage and other financial obligations. This helps ensure you can afford homeownership and lessen the risk of defaulting. Also, you must:
1. Live in the home being purchased with the loan, and
2. Meet one of the following:
Active-duty servicemember requirements: Currently on active duty and have served at least 90 continuous days. Active duty includes Active Guard Reserve members activated under Title 10 U.S.C.
Veteran requirements: Veterans separated from active duty between August 2, 1990, and the present (Gulf War era) must have served:
- 24 continuous months, or
- A full period (at least 90 days) for which you were called to active duty, or
- At least 90 days if discharged for hardship, a reduction in force, or for government convenience, or
- Less than 90 days (if discharged service-connected disability).
This includes Reserve and National Guard members called to active duty for at least 90 days. Active duty DOES NOT include active duty for training.
National Guard on active-duty requirements:
- At least 90 days of non-training active-duty service (shown on DD214 for the activation or any other documents supporting the activation), or
- A t least 90 days of active service, including at least 30 consecutive days (shown as 32 USC sections 316, 502, 503, 504, or 505 activations on your DD214, annual point statements, DD220 with accompanying orders, or any other documents supporting the activation.
Reserve on active-duty requirements: At least 90 days of non-training active-duty service (shown on DD214 or any other documents supporting the activation. The VA webpage has a complete listing of the length of service requirements for other eras at https://bit.ly/3LCYrFw.
Reserve and National Guard service member requirements if not otherwise eligible: If not otherwise eligible (For example, with prior active duty or Title 10 or Title 32 service), this includes those currently serving in the Selected Reserve or National Guard (member of an active unit, attending required weekend drills, and two-week active-duty training). You must complete a total of six credible years (see Appendix A of the VA Home Loan Buyer’s Guide) and ONE of the following:
- Continue to serve in the Selected Reserve.
- Serve as Active Guard Reserve (AGR).
- Placed on the retired list.
- Transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service.
AGR Service members (on Title 32 U.S.C. orders) and Individual Mobilization Augmentee Service members must meet the 6-year requirement. Periods of Inactive Ready Reserve service are NOT creditable toward the 6-year requirement.
Reserve/National Guard veteran requirements (not otherwise eligible): If not otherwise eligible (see the “Veteran” paragraph above), you must have completed a total of six credible years (See Appendix A of the VA Home Loan Buyer’s Guide) in the Selected Reserve or National Guard (member of an active unit, attended required weekend drills and two-week active duty for training) and ONE of the following:
- Discharged with an honorable discharge, or
- 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.
Inactive Ready Reserve service periods are NOT creditable toward the 6-year requirement. Persons who completed less than six years may be eligible if discharged for a service-connected disability. For discharge status that is not honorable, see the Other Than Honorable, Bad Conduct, or Dishonorable discharges under Appendix A of “VA Home Loan Buyer’s Guide.”
Eligible spouse requirements
The spouse of a Veteran can also apply for home loan eligibility if they:
1. Are eligible for, or in receipt of, a qualifying Dependency and Indemnity Compensation benefit (see the VA webpage “About VA DIC for Spouses” at https://bit.ly/3rcIrzS, and
2. Under ONE of the following conditions:
- Unremarried surviving spouse of a veteran who died while in service (active, reserve, or national guard) or from a service-connected disability, or
- Unremarried surviving spouse of certain total disabled (100% rated) veteran whose disability m ay not have been the cause of death, or
- Surviving spouse who remarries on or after December 16, 2003, after attaining age 57, or
- The spouse of a living service member missing in action or a prisoner of war for more than 90 days, for as long as the Service member is in that status (this is one-time use only).
Appendix E of the “VA Home Loan Buyer’s Guide” and paragraph 3 of 38 U.S.C §3701(b) provide more information.
Other eligible borrowers
1. A U.S. citizen who served in the Armed Forces of a government allied with the United States in World War II.
2. Served as a member in certain organizations, such as:
- Cadet at the United States Military, Air Force, or Coast Guard Academy.
- Commissioned Officers of the Public Health Service.
- Officer of the National Oceanic & Atmospheric Administration (NOAA)
- Midshipman at the United States Naval Academy
- Merchant Seaman during World War II
Chapter 7 of the M26-1 Guaranteed Loan Processing Manual, available at https://bit.ly/3XKo8K6, provides details for other eligible borrowers.
This is a complex subject. Use a realtor, lender, and a VA-accredited Veterans Service Officer (VSO) experienced with VA home loans.
Continued next week.
Larry Dandridge is a Vietnam War wounded warrior, disabled veteran, ex-Enlisted Infantryman, ex-Warrant Officer Pilot, and retired Lt. Colonel. He is a past Veterans Service Officer, a Patient Adviser at the RHJ VA Hospital, the Fisher House Charleston Good Will Ambassador, and the VP for Veteran Affairs for the local Army Association Chapter. Larry is the author of the award-winning book Blades of Thunder and a contributing freelance writer with the Island News. Contact him atLDandridge@earthlink.net or 843-276-7164.
