The home mortgage loans guaranteed by the U.S. Department of Veterans Affairs have been a popular way for veterans and active duty service members to afford their first homes for over 70 years. Because the home loans are guaranteed, many lenders are eager to offer these low-cost home loans for veterans. Though not difficult, the application process is somewhat different than the one for conventional loans, and many lending institutions have departments or specially trained personnel to help with the required documentation.
If you are a member of the military on active duty for at least 90 days, you are eligible for a VA guaranteed mortgage loan. Similarly, veterans who have served between 90 and 181 days of continuous service, depending on the time period, are eligible to apply for these loans. National Guard service members are also eligible for a home loan if they are currently serving or have served for six years, have been discharged or on the retired or stand-by list. Under certain circumstances, the spouses of military members may also be eligible for a VA loan.
Certificate of Eligibility
Applicants are required to document their service in the military with a Certificate of Eligibility. The certificate is issued with a number of different types of evidence:
- A DD Form 214 for veterans that indicates the character of the service and the reason for separation from service
- For current service members, a current statement of service signed by a commander of the unit, adjutant or personnel office
- For current National Guard members, a statement of service signed by a commander of the unit, adjutant or personnel office
- For discharged National Guard members who were never activated, an NGB Form 22, Report of Separation and Record of Service
- Surviving Spouse not receiving benefits must submit a VA Form 21-534
- Surviving Spouse receiving benefits must submit a VA Form 26-1817
In addition to the Certificate of Eligibility, applicants for a VA guaranteed mortgage loan must provide:
- Documentation of sufficient income to afford payments on the loan
- A good credit record – VA lenders set their own minimum credit record requirements for a loan
- Proof that the property can be occupied – VA loan benefits must go to properties that are suitable for occupation, such as single-family homes, condominiums, townhomes and multi-family residences.
- Intention to occupy the property – First time home loan applicants must assure their intention to occupy the property.
- A property appraisal to ensure that the property is valued sufficiently for the loan amount.
Closing the Sale
Applicants are encouraged to compare the loans of a number of lenders to ensure the best terms. After the applicant has been approved for the VA guaranteed mortgage loan, he or she must close on the sale of the property, provide proof of homeowners insurance for the property and pay closing costs. These closing costs are regulated by the VA. The title is then issued and insured by a title insurance company to prevent any other claims on the property.
Although the process may seem daunting to first-time borrowers, lending institutions have created protocols for VA loans that facilitate the application process so that veterans and active duty service members can take advantage of this valuable benefit.