Eligibility Requirements for VA Loans

Being eligible for a VA loan opens up a world of benefits and money-saving opportunities. VA loans allow an eligible borrower to open up a loan to buy a home with backing from the Department of Veteran’s Affairs (VA). This backed, or guaranteed, mortgage motivates the lender to provide a more favorable interest rate than the borrower would normally be eligible for based on their credit score. Eligibility is based on whether the person has served or is serving in the armed forces, including Guard and Reserve servicemembers.

For a full-time service member, you are eligible essentially from the moment you graduate from basic training. Technically, a servicemember is eligible from the moment basic training starts, but good luck trying to go through the steps and hoops necessary to get one during basic training. Quite frankly, if you’re thinking about a mortgage and the benefits of a VA-guaranteed mortgage vs. a conventional mortgage while you’re knee-deep in mud running up a mountain on 2 hours of sleep, there may be something wrong with you. If the recruit were to make such a request, however, they would likely be told to wait until basic training was completed to make the request.

Once basic training is completed, as a recruit goes through individualized technical training or AIT, if the recruit were to make a request about getting a VA mortgage, he or she would likely be told the same thing. In this case, however, it has more to do with the lack of time that the recruit would have to handle such a thing. Only after training has completed will the recruit have the necessary disposable time to properly work out a VA-guaranteed mortgage.  But at the conclusion of training, the active servicemember is immediately eligible for benefits and can begin the process whenever he or she sees fit. But something that ought to be remembered is that at the beginning of military service and for the first few years, the service member will typically be moved around with some frequency. That makes it rather difficult and not usually wise to open up a VA loan in the early years of service. But it is theoretically possible if desired.

For an active servicemember to start the process for getting a VA-backed mortgage, they’ll need to meet with a lender to acquire a Certificate of Eligibility (COE). Going through a lender is not the only way to get a COE, but it is usually the easiest. Once the COE is obtained, the rest of the process can be followed, using existing documents such as recent military pay stubs as evidence for a servicemember’s eligibility.

But for a guard or reservist, the process is a little bit more complex. Just as for regular service members, the VA loan benefits provide guard and reservists an opportunity to get a better interest rate than they would normally qualify for. However, for guard and reservists, there is a requirement for minimum time served in order to be eligible for those benefits. Those serving in the Guard or the Reserves have to complete at least six years of service before being eligible. This restriction is in place because of the smaller time commitment and looser separation policies of the guard and reserves compared to full-time service. By establishing a minimum service requirement, abuse of the system is prevented in a large way.

If a guard or reservist has retired, the minimum service requirement is not a concern because it has obviously been completed and all that is required to demonstrate eligibility is an NGB Form 22. The NGB Form 22 is a Report of Separation and Record of Service. There is another form that is allowable as evidence, called the NGB Form 23, or the Retirement Points Accounting. One of these forms in addition to proof of the nature of discharge should be sufficient to establish eligibility for a VA loan.

If a member of the Selected Reserve that was never discharged would like to utilize his VA loan eligibility, they will need to provide a copy of their most recent annual retirement points statement and evidence of honorable service. If they were activated, they merely need to provide their DD Form 214.

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