Providing top-notch service to military house hunters doesn’t stop with neighborhood recommendations and home tours.
Financing is often the most complex part of buying a home for new buyers. Frustrated by information overload and a lack of clear answers, confused buyers often turn to their trusted agents for mortgage advice.
Make sure that you can offer sound guidance to your military clients with a basic understanding of VA loan eligibility. It’s important to recognize that not all military members are eligible for VA financing. Let’s take a closer look at basic eligibility requirements for this powerful program.
Has your buyer met the service requirement?
Active duty military members and veterans must complete a certain amount of service before VA loan benefits can be tapped. Military buyers can satisfy the service requirement by meeting ONE of the following criteria:
- 90 consecutive days of service during wartime
- 181 days of service during peacetime
- 6 years of service in the National Guard or the Reserves
Spouses of service members killed in the line of duty or who died from a service-connected disability may also qualify. Advise your buyers that this determination can only be made by the VA.
All VA loan applicants need a Certificate of Eligibility
Military members need to prove to a lender that the service requirement has been met. That’s where the Certificate of Eligibility (COE) comes into play. The COE officially states the applicant that has satisfied the service requirement is eligible to start the VA loan process.
Your veteran borrowers can fill out a COE Request (also known as Form 26-1880) and submit it to the VA along with a copy of a DD 214.
But the quickest way to obtain a COE is through a VA-approved lender. Lenders can access the VA’s online system to verify a buyer’s entitlement in a matter of minutes. Potential borrowers can also request a COE through the mail or via the VA’s website.
What if my buyer has already used his VA loan benefits?
Repeat borrowers are certainly able to re-use their VA loan benefits, provided that all previous VA loans have been paid in full and the previously-financed properties have been sold.
It’s also possible for a veteran to retain a VA-financed property and purchase a second home (one-time only) with a VA loan. The previous VA loan must have been paid in full and the second home purchased must be used as a primary residence.
The goal of the VA loan program is to help those who served achieve their dreams of homeownership. Even if your buyer has defaulted on a previous loan or has already used their benefit, the VA loan program’s features can still allow them to borrow once again. Learn more about how second-tier entitlement and many VA lenders’ flexible credit standards can help overcome these hurdles.
What about lender approval?
VA loans are backed by the government which allows individual lenders to offer competitive interest rates. But military buyers must also meet the eligibility requirements set by an individual lender. Lenders will generally employ more lenient credit standards for VA loan applicants, since a portion of every VA loan is guaranteed by the government.
How does this leniency translate into usable guidelines for your buyers? Most VA lenders favor debt-to-income ratios below 41 and require a credit score of at least 620, but don’t let shaky credit discourage your borrowers. Two years of consistent employment is ideal, although flexibility is certainly warranted in some cases.
Consider VA loan preapproval for your clients
Every buyer is certainly different, with unique credit histories, financial profiles and service experience. Encourage your buyers to take a closer look at their particular qualifications through VA loan preapproval. Preapproval helps buyers identify and remedy any eligibility problems, and is a great supplement to any purchase offer.
For more information regarding VA loan preapproval or eligibility requirements, contact Veterans United Home Loans at 855-524-7279. You can also check out this helpful guide on the overall loan process including eligibility and learn how you can be a VA-savvy agent for any of your future military homebuyers.
Photo courtesy of Clyde Robinson