A VA loan is a loan available to veterans and active-duty service members that’s offered through the U.S. Department of Veterans Affairs (VA). It allows past or current service members and their surviving spouses to purchase a home with a low interest rate and a small or nonexistent down payment requirement.
Did you know that members of the U.S. National Guard or Army Reserve can also qualify for VA loans? Many current or former members of the National Guard or Reserve are unaware that they too can qualify for these loans. Let’s find out how.
VA Loan Requirements
In order to secure a VA loan, you’ll generally need to meet a few basic requirements. While the VA doesn’t set a minimum credit score requirement, some lenders do. It varies by lender, but you’ll generally be good with a credit score of at least 580 – 620. You will also need to show proof of income and a certificate of eligibility (COE). VA loans are a little different from conventional loans and may also require that you complete a few extra steps before closing on your loan, such as performing a VA pest inspection and paying the VA funding fee.
Eligibility Requirements For National Guard And Reserve
The full list of requirements can be found on the VA’s website, but in general, to qualify for a VA loan you must usually meet one of the following criteria:
- Served 181 days of active service during peacetime
- Served 90 consecutive days of active service during wartime
- Are the spouse of a service member who lost their life in the line of duty
For members of the Army Reserve or National Guard, however, the requirements are slightly different – which is why many qualifying service members aren’t aware they can get a VA loan in the first place. To qualify for one of these loans as a member of the Reserve or National Guard, you must meet the following criteria:
- Service members activated under Title 32 orders may be eligible for a VA loan after serving 90 cumulative days of honorable full-time duty between August 2, 1990 and now, 30 days of which have to have been consecutive
- For any other period of service, you must have completed 6 years of service and must have been honorably discharged
- There are various exceptions – for instance, you may qualify if you were discharged for reasons such as hardship or certain medical conditions
Documents Needed For A VA Loan
To apply for a VA loan as a member of the Reserve or National Guard, you’ll need your certificate of eligibility (COE)which you can obtain through your VA approved lender with proper proof of service. You can also get your COE online through the VA’s eBenefits portal or you can apply by mail by sending in VA form 26-1880.
How Can I Apply For A VA Loan?
To apply for a VA loan, you should first find a VA-approved lender, like Rocket Mortgage®. Once you’ve found a lender, they can typically help you obtain your COE and get prequalified or preapproved for your loan amount. After that, your lender will guide you through the rest of the process, like getting your VA Appraisal and taking care of other requirements that need to be addressed before closing.
Alternatives To A VA Loan
If you’re a member of the U.S. Army Reserve or National Guard and are not eligible for a VA loan, there are still other loan options for you, too. Let’s go over a few alternatives if you can’t qualify for or aren’t interested in a VA loan.
FHA Loan
An FHA loan is a mortgage loan that’s backed by the Federal Housing Administration (FHA). These loans are designed for lower-income home buyers and have less strict requirements for minimum borrower credit score and down payment amounts. Similar to a VA loan, you can get an FHA loan with a credit score as low as 580 – 620.
Both FHA and VA loans are great options, so if you’re between an FHA and VA loan, you may want to research the specific differences between the two loans. With an FHA loan, for instance, you don’t have to pay the VA funding fee – but you will have to pay a mortgage insurance premium (MIP) which isn’t required for VA loans.
Check out our guide to all the differences between FHA and VA loans for more details.
Conventional Mortgage
A conventional mortgage is a loan that isn’t backed or insured by the U.S. government. It must be “conforming,” which means it needs to meet the requirements to be sold to Fannie Mae or Freddie Mac. Conventional loans are some of the most common mortgage loans but have higher minimum FICO® Score and down payment requirements than VA or FHA loans.
With most conventional loans, you’ll also see slightly higher interest rates than you would with VA or FHA loans – and you’ll likely pay for private mortgage insurance (PMI), too.
For more information on what sets conventional loans apart from other loans and when they might be a smart choice, check out our guide to how conventional loans and FHA loans differ.
USDA Loan
USDA loans are loans available to rural home buyers. These loans are offered through the U.S. Department of Agriculture and are meant for low-income buyers in very rural areas. These loans tend to have very low interest rates and require no down payment. To get one of these loans, you can’t live in a very populated area and must meet certain income requirements – but if that sounds like you, a USDA loan might be a great option.
Rocket Mortgage is not currently accepting USDA loan applications.
The Bottom Line
VA loans are a fantastic and exclusive option for active-duty service members, veterans and their spouses that can grant advantages not found in other loan options, such as relaxed credit requirements, no down payment requirement and the ability to refinance up to 100% of a home’s worth.
If you are a veteran or current member of the National Guard or U.S. Army Reserve, contact Rocket Mortgage to see if you qualify for a VA loan and start the home buying process today.
The post VA Loans For Reservists And National Guard Members: Who’s Eligible And What Steps Are Required appeared first on Zing Blog by Quicken Loans.
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