Your Certificate of Eligibility (COE) verifies you meet service requirements for a VA loan. However, not everyone knows there are multiple ways to obtain your COE – some easier than others.
Lenders are required to get proof of a veteran’s service during the VA loan process. The Certificate of Eligibility (COE) serves as that proof, and tells a lender that an applicant has officially met the minimum service requirement.
There is more than one way to obtain a Certificate of Eligibility, and while it’s a short and simple document, it can stir up a lot of confusion. Let’s clear up the mayhem and tackle some of the most common questions regarding the Certificate of Eligibility.
The Certificate of Eligibility is known as the starting point of the VA loan process and proves to a lender that a buyer has met the VA’s service requirement. Every veteran has to meet one of the following service requirements before they can obtain a VA loan:
There are 3 ways to obtain your certificate of eligibility:
Once you obtain your Certificate of Eligibility, you'll notice an array of information, including your name, Social Security number, branch of service and even the name of the VA employee who issued your COE. Most of it is clear and straightforward. But one part that often leads to questions from prospective VA borrowers is what's known as your entitlement code.
This two-digit number doesn't mean anything to borrowers, but it gives VA lenders more information about your military service history and whether you may be exempt from paying the VA Funding Fee, an upfront cost that goes directly to the Department of Veterans Affairs. Borrowers who receive compensation for a service-connected disability, Purple Heart recipients, and eligible surviving spouses do not have to pay this fee.
Here's a look at the 11 VA loan entitlement codes:
As you can tell at a glance, most of the entitlement codes relate to period of military service. But an important one for veterans who've used their VA loan benefit in the past is Entitlement Code 05.
This entitlement code notes that a borrower has previously obtained a VA loan, repaid the loan in full and restored the entitlement utilized on the property. These borrowers are subject to paying a higher funding fee on future VA purchases, unless their Certificate of Eligibility indicates they are exempt from the fee.
Talk with your loan officer if you have questions about your entitlement code or if you believe yours is incorrect.
No problem. Just obtain another one via one of the three methods listed above.
If there’s one thing the COE is not, it’s a guarantee. The word “guarantee” frequently gets tossed into VA loan discussions, but let’s make this clear: No one is guaranteed to receive a loan through the VA loan program. The COE simply signifies that you’ve cleared one hurdle on the track: namely, that you’ve met the military service requirement. Your property still has to measure up to VA criteria, and your borrower qualifications (credit score, income, debts) must meet a lender's standards.
Sometimes a lender can’t automatically obtain a potential borrower’s COE. This can occasionally happen to the following potential borrowers:
Don’t panic if you’re left hanging by a lender’s automated system. This is a relatively common occurrence, and one that VA-savvy lenders know how to handle. Military buyers are usually asked to provide supporting documentation such as a DD214 or points statement, which is sent to the VA for evaluation.
Have any other questions about the COE? Leave them in our comments section below, or contact a Veterans United loan specialist at 855-870-8845.
You can also check out this really helpful guide on the VA home loan process and eligibility here.