VA Loan Eligibility Simplified

Real Estate

There are a lot of articles out there that go into detail with reference to VA loan eligibility and it can be confusing navigating through all of them to figure out if you are eligible or not.  I am not going to outline all the details of who is and who is not eligible based on characterization of service.  Instead, I am going to break this down into two simple categories and requirements.

VETERAN.  Yes, you MUST be a veteran. What classifies you as a veteran is your DD 214 or Certificate of Release or Discharge from Active Duty.  If you want to learn more about the DD 214 then here is a good resource: http://www.dd214.us/.  If you did not get issued a DD 214 you cannot prove your classification as a veteran. Even if you DID get a DD 214, you still may not be eligible for the VA loan benefit.

So, the first step is to establish your veteran status with the DD 214.  The next step, and this is really the key, is to get your Certificate of Eligibility or COE.  The COE is what tells a lender that they can use a VA loan option.  No COE, NO VA LOAN.  When the time comes and you need to see if you are eligible go here: https://www.benefits.va.gov/homeloans/purchaseco_certificate.asp 

The above link will take you to the VA's online benefits page that breaks down COE eligibility and, towards the bottom of the page, tells you how to apply for it.  As a side note, most lenders who are familiar with VA loans can also assist you in getting your COE.

ACTIVE DUTY SERVICE MEMBERS. So you are still on active duty and want to buy a house using the VA loan. Well, you're in luck!  Although the VA loan is a great benefit for Veterans, it is also usable by active duty service members.  There are of course conditions that you must meet.  To see what these are go here:
https://www.benefits.va.gov/homeloans/purchaseco_eligibility.asp
Again, this is the VA website which is always the best place to get information regarding use of the VA loan benefits.  

Once you have determined that you are eligible you must then get a Statement of Service (SOS) from your command.  If you go to the link I posted above for your COE you will also see a section labeled "Active Duty Servicemember" under the "Category" section.  This spells out what the SOS must have on it and, who it should be signed by. No, there is no particular format but it is not difficult to put together.  This is based on experience as I have used my VA benefit twice while I was on active duty.  

There you have it, simple and to the point.  If you are eligible one of these items is necessary.  Let me caveat this with three important points.

1. Having a COE does not necessarily equate to being eligible.  Based on the requirements your COE, if a veteran, may state that you ARE NOT eligible to use a VA loan.  

2. An SOS does not necessarily equate to being eligible.  Remember, this is just a statement of your current service.  If you don't qualify under the VA criteria the SOS will not automatically qualify you for the VA loan benefit. This being said, YOU are responsible to ensure you are eligible, NOT your command.  They may or may not understand the requirements.  If they do they will tell you that you are or are not eligible.  If they don't, they will probably just give you the SOS anyway as it is not stating your eligibility, just your current service.

3. Eligibility does not equate to loan qualification.  Just because you are eligible to use a VA loan does not mean that your current finances will qualify you for a loan.  Although the formula's used to determine loan eligibility under a VA loan are a bit more lenient, you are still not guaranteed to qualify for a loan.  DO NOT confuse VA loan eligibility with loan qualification or approval.  

In summary, if you are a Veteran or Active Duty Service Member your eligibility for a VA loan is determined by a COE or an SOS.  Being eligible for a VA loan does not mean you will qualify for a loan, it simply means that you can use the VA loan benefit as one of the home financing programs.  Your agent or your lender will be the ones to help you through this process.  If they don't know how it works, it's time to find a new agent or lender!  

 

I hope this helps and please feel free to send me any questions you may have or leave any comments that you think should be added about this process.  As a quick reference here are the Links that were mentioned above.

 DD 214 INFORMATION

 VA LOAN ELIGIBILITY REQUIREMENTS

 VA LOAN COE/SOS; HOW TO GET THEM