The VA loan program was designed to repay veterans and service members for their selfless service to the United States. VA loans have helped generations of veterans, service members, and military families to achieve homeownership in America.
The flexible guidelines and helpful financial assistance make this program helpful for a wide range of veterans. Although VA loans are specialized mortgage options, they are not any more difficult to understand than other types of home loans.
It is important to understand some of the VA loan eligibility requirements that you can expect from most lenders. Typically, you can expect private lenders to check your credit score before approving a mortgage. Although there is no minimum credit score requirement established by the Department of Veterans Affairs, private lenders may have their own credit requirements. In some cases, you may qualify for a VA loan if you have a low credit score. However, you should expect most private lenders to charge you additional fees if this is the case.
Another factor that is considered when it comes to VA loan eligibility is your debt-to-income ratio (DTI). Your DTI is the percentage of your gross monthly income that you use specifically to pay for your monthly debt payments. Lenders will use your DTI to determine your borrowing risk before generating a mortgage for you.
A lower DTI ratio will make you a more attractive borrower and you are more likely to secure the best rates on your VA loans. The specific DTI required for approval on a mortgage will depend on the private lender and other factors, but you should expect a maximum acceptable DTI of 45% for most VA loans.
Every lending situation is different so you should contact your mortgage banker for their specific requirements for a loan. Even if you do not meet the debt-to-income requirements you may still be able to qualify for a VA loan through certain adjustments including any residual income you may have.
VA loans also have certain guidelines on the types of properties you are eligible to purchase through the program. For instance, a VA loan can only be used to purchase a home that will be the primary residence for you and your family. Vacation homes or investment properties are not eligible for the VA loan program. Finally, homes must meet the Minimum Property Requirements and be approved by a VA appraised before any VA loans are approved.