VA loans are a product of the U.S. Department of Veterans Affairs’ home loan program, which puts the word “veteran” front and center any time that these loans are discussed. It’s also generally acknowledged that VA loans offer fantastic terms for borrowers, but they are only available to a select group. For many would-be borrowers who are trying to decide what form of financing will help them reach their housing goals, this naturally leads to a simple question: Are VA loans only for veterans?
Are VA Loans Only for Veterans?
As Merriam-Webster points out, the term “veteran” can be used in a general sense to refer to someone with lengthy, wide-ranging experience in any field. However, the U.S. military defines it more narrowly. Per Title 38 of the Code of Federal Regulations, any individual who has served in any branch of the armed forces and was discharged or released under conditions other than dishonorable ones is classified as a veteran. Whichever definition you use, VA loans aren’t just for veterans.
Eligibility for VA Loans
Eligibility to participate in the VA home loan program is a benefit earned with service, and those who qualify are able to obtain a Certificate of Eligibility. Eligibility is based on your service history and duty status, and the exact requirements vary depending on your situation. However, the VA makes it very clear that members of the following groups who meet the necessary requirements may be eligible for a VA loan:
- Active-duty service members
- Veterans
- National Guardsmen
- Reservists
- Surviving spouses of veterans
- U.S. citizens who served in the Armed Forces of governments allied with America during World War II
- U.S. citizens who served in certain organizations (These may include Public Health Service officers; cadets at the U.S. Military, Air Force, and Coast Guard Academies; midshipmen at the U.S. Naval Academy; and officers of the National Oceanic and Atmospheric Administration.)
Other VA Loan Requirements for Borrowers
Simply being eligible for a VA loan isn’t enough to ensure that you’ll be approved for one. As NerdWallet explains, you’ll also need to have sufficient credit and income to qualify for the loan. The VA doesn’t set a minimum credit score, and it advises lenders to take a relaxed approach to evaluating the credit history of would-be borrowers who are seeking VA loans. However, the VA doesn’t actually make the loans. Instead, it offers a guarantee that reduces the risk for the private lenders who actually do. Those lenders are within their rights to set their own standards, and they may have minimum credit score or debt-to-income ratio requirements.
There are also requirements to keep in mind for any property that you hope to buy with a VA loan. For example, VA loans can only be used to fund the purchase of a primary residence. The Mortgage Reports also offers a reminder about the VA’s Minimum Property Requirements. The VA wants to verify that a property is worth its cost and will offer the veteran a safe, sound, and sanitary place to call home, so it insists on appraisals and requires the VA appraisers to evaluate both the price and the general condition of the home. Both must be deemed acceptable before the loan will be approved.
Are VA Loans Only for Home Purchases?
Are VA loans only for veterans looking to buy homes? As VA.org indicates, VA loans can actually be used to achieve a variety of housing goals:
- Buy a house.
- Buy a condo in a VA-qualified community.
- Buy a multi-unit property with up to four units, as long as you use one as your residence.
- Buy a lot or a manufactured home.
- Invest in energy-efficient upgrades for your home.
- Improve or repair your primary home.
- Refinance your mortgage.
At PrimeLending: Manhattan, Kansas, we consider it a special honor to serve those who have served our country. If you have questions about the VA home loan program and would like to learn how to get the most out of your VA housing benefit, we’d be delighted to assist you. Contact us today to get the process started.
