If you are a veteran or active duty military, you have access to one of the most beneficial and flexible home purchasing programs on the market today – VA Loans. But like many government-sponsored programs, understanding VA loan eligibility guidelines isn’t always easy. Here are answers to five common questions to help make the VA loan process simpler and easier to understand for veterans and their spouses.
What Are the Benefits of a VA Loan?
The biggest benefit? VA loans allow a veteran or active duty service person to buy or refinance a home with no required down payment. In addition, ‘make-sense’ underwriting, reasonable credit and income requirements and very low interest rates make VA loans a popular program among veterans and active members of the military. The VA loan is designed to follow guidelines that protect the veteran or service person’s rights and pocket book. For instance, the fees and costs are closely controlled and the value and condition of the property is carefully reviewed. There is no maximum loan amount for a VA loan and an eligible buyer can keep their current home and VA mortgage, and buy another without having to sell or refinance the first property.*
Who Qualifies for a VA Loan?
Active duty, discharged, reservist (after 6 years of service), and retired service persons from any of the following are eligible if you meet basic qualifying criteria for a VA home loan.
- Air Force
- Coast Guard
- National Guard
How Does a Civilian Spouse’s Income or Credit History Affect Eligibility?
More often than not, you’ll find that with most military couples, one partner is a service member while the other is a civilian. Sometimes, these couples assume that the civilian’s income or financial standing could be a problem or not count toward qualifying for a VA loan. That couldn’t be further from the truth. In fact, the civilian spouse’s income could actually help! If the civilian’s income is substantial, it could potentially help the service member qualify for a larger loan.
The Department of Veterans Affairs (VA) allows spouses to cosign for loans. In this case, you could use the civilian spouse’s income with the military spouse’s eligibility for the VA loan. However, it’s important to remember that the VA loan is no different from any other loan when it comes to your debt-to-income ratio and credit history. If your civilian spouse makes more but has a poor credit rating, that could hurt your chances of qualifying for a loan, regardless of your military standing.
Are Surviving Spouses Eligible for VA Loan Benefits?
Fortunately, the VA loan program recognizes the sacrifice and service of military families, especially surviving spouses. In 2012, the Honoring America’s Veterans and Caring for Camp Lejeune Families Act extended eligibility for surviving spouses to include:
- A non-remarried surviving spouse of a veteran or service member who died in service or from a service-related disability
- A spouse of a service member who was missing in action or a prisoner of war for at least 90 days
- A surviving spouse of a veteran who was rated totally disabled and was eligible for disability compensation at the time of death from any cause
For surviving spouses of military members who died after military service ended, the VA requires:
- A copy (no originals) of the veteran’s DD Form 214 (discharge papers)
- A copy of the veteran’s death certificate
- A copy of the marriage certificate
How Does A Divorce Affect VA Loan Eligibility?
If you are the ex-spouse of a service member, active or veteran, the answer is straightforward when it comes to getting a VA loan—unlike a surviving spouse, you are not eligible for a new VA loan.
The answer is much more complicated if you get a divorce after you have a VA loan together. If the civilian spouse is a cosigner, they are eligible to remain in the home without the service member living there. However, the service member forgoes entitlement unless their ex-spouse refinances and/or pays off the VA loan in full.
Still Have Questions? We Can Help.
PrimeLending has helped thousands of veterans and active duty members get into homes over the years. Although the process can be challenging, our home loan experts know how to simplify the process. Contact a PrimeLending home loan expert to learn more.
*Additional restrictions may apply. Contact your PrimeLending loan officer for more details.