VA Loan Qualification: A Complete Guide

February 1, 2025
Aaron Clowes
VA Loans

Everything You Need to Know About VA Loans: A Complete Guide

If you’ve served in the military, you’ve earned benefits that can make homeownership easier—one of the best being the VA loan. But how does it work, and what are the requirements? This guide breaks down everything you need to know about VA loan qualification, the benefits, and how to get started.

1. What Is a VA Loan?

A VA loan is a mortgage backed by the U.S. Department of Veterans Affairs. It’s designed to help eligible military members, veterans, and their families buy, refinance, or build a home with favorable terms.

Unlike conventional loans, VA loans don’t require a down payment, making homeownership more accessible for those who have served.

2. Who Qualifies for a VA Loan?

To be eligible for a VA loan qualification, you must meet certain service requirements based on your time in the military.

Basic Service Requirements

You may qualify if you:

Served at least 90 consecutive days of active duty during wartime.
Served 181 days of active duty during peacetime.
Served six years in the National Guard or Reserves.
Are a surviving spouse of a service member who died in the line of duty or due to a service-connected disability.

If you meet these conditions, you can apply for a Certificate of Eligibility (COE), which proves your VA loan eligibility to lenders.

3. Key Benefits of a VA Loan

A VA loan offers some of the most generous terms compared to conventional and FHA loans. Here’s why so many veterans choose it:

✅ No Down Payment

Most loans require a 3–20% down payment, but VA loans allow 100% financing. That means you can buy a home without saving thousands upfront.

✅ No Private Mortgage Insurance (PMI)

Most loans with less than 20% down require PMI, which adds to your monthly costs. VA loans skip this fee, saving you hundreds per year.

✅ Competitive Interest Rates

VA loans usually have lower interest rates compared to conventional loans, which can reduce your monthly mortgage payments significantly.

✅ Flexible Credit Requirements

While lenders prefer a credit score of 620 or higher, VA loans are more lenient and can approve borrowers with lower scores.

✅ No Loan Limits for Most Borrowers

As of 2020, VA loan limits were removed for borrowers with full entitlement, meaning you can borrow as much as your lender approves you for—without a down payment.

✅ No Prepayment Penalty

Unlike some other loans, VA mortgages allow you to pay off your loan early without extra fees.

✅ Assistance in Case of Financial Hardship

If you struggle with payments, the VA can step in to help negotiate with your lender to avoid foreclosure.

4. Types of VA Loans

A VA loan isn’t just for buying a home. It also helps with refinancing, home improvements, and more.

🛠 VA Purchase Loan

Helps eligible buyers purchase a home with no down payment.
Can be used for single-family homes, condos, and even some multi-unit properties.

🔄 VA Cash-Out Refinance

Allows you to refinance your home and take out cash from your equity.
Great for debt consolidation or home improvements.

📉 VA Interest Rate Reduction Refinance Loan (IRRRL)

Also called a VA Streamline Refinance, this program helps lower your mortgage rate quickly with less paperwork.
No appraisal or income verification is required in most cases.

🏗 VA Renovation Loan

Allows you to finance the purchase and renovation of a home in one loan.
Great for fixing up an older property with needed repairs.

5. VA Loan Qualification Requirements

Meeting the service requirements is just one part of VA loan qualification. Here’s what else lenders look for:

📝 Credit Score Requirements

The VA doesn’t set a minimum credit score, but most lenders require at least 620. Some may approve lower scores, but expect stricter terms.

📊 Debt-to-Income Ratio (DTI)

Most lenders prefer a DTI of 41% or lower. However, VA loans allow flexibility if you have strong compensating factors like savings or a high credit score.

🏡 Primary Residence Requirement

VA loans are for primary residences only. You can’t use a VA loan to buy an investment property or vacation home.

🔍 Certificate of Eligibility (COE)

Before applying, you’ll need a COE, which confirms your eligibility. You can get this through:

Your lender (they can pull it for you).
The VA eBenefits portal.
Mailing a request to the VA.

6. VA Loan Process: Step-by-Step

Step 1: Get Your COE

Obtain your Certificate of Eligibility to prove you qualify.

Step 2: Get Preapproved

A lender will check your credit, income, and finances to determine how much you can borrow. You can start your preapproval HERE to get ahead.

Step 3: Find a VA-Approved Home

Your home must meet VA property guidelines, which ensure it’s safe and structurally sound.

Step 4: Make an Offer and Get a VA Appraisal

The VA requires an appraisal to confirm the home’s value and condition before approving the loan.

Step 5: Close on Your New Home

Once approved, you’ll sign the final paperwork and get the keys to your new home!

7. Common VA Loan Myths (Debunked!)

❌ Myth: VA Loans Take Too Long to Close

✅ Fact: VA loans close just as fast as conventional loans—often within 30 days.

❌ Myth: You Can Only Use a VA Loan Once

✅ Fact: You can use VA loans multiple times throughout your life!

❌ Myth: VA Loans Are Only for Single-Family Homes

✅ Fact: You can use a VA loan for condos, manufactured homes, and even multi-unit properties (if you live in one of the units).

8. How to Apply for a VA Loan

Applying for a VA loan is easier than you think! The fastest way is to work with a VA-experienced mortgage broker who can shop multiple lenders to find you the best deal.

If you’re ready to get started, talk or text us at 916-465-6639, email us at hello@newwaymortgage.com, or schedule an appointment HERE.

Want to get preapproved now? Apply HERE and take the first step toward homeownership!

Conclusion

VA loans make homeownership easier and more affordable for veterans and active-duty service members. With no down payment, low rates, and no PMI, it’s one of the best mortgage options available.

If you meet the VA loan qualification requirements, now is the time to take advantage of this incredible benefit.

Need expert guidance? Subscribe to our YouTube channel for more homebuying tips, or reach out to us today!

FAQs

1. How many times can I use a VA loan?

There’s no limit! You can use a VA loan multiple times as long as you meet the eligibility criteria.

2. Can I buy a second home with a VA loan?

No, VA loans are for primary residences only.

3. What if my COE says I have “remaining entitlement”?

It means you’ve used part of your VA loan benefits but still have borrowing power left.

4. Do VA loans have closing costs?

Yes, but they’re typically lower than conventional loans. The VA funding fee can be rolled into the loan.

5. Can I refinance my current mortgage into a VA loan?

Yes! A VA refinance could lower your rate or let you cash out equity.