VA Loan Eligibility and Financing Rules

Department of Veteran Affairs loans are one of the most valuable military benefits.

These loans don’t require a down payment, don’t require private mortgage insurance (PMI); often have lower interest rates than conventional loans and may be easier to qualify for, depending on your circumstances.

This article will give you an excellent general overview of a VA loan as it pertains to eligibility and financing.

The government guarantees about a quarter of a borrower’s mortgage, up to the VA loan limits, giving approved lenders a higher degree of security.

In turn, that security often leads to excellent loan terms for qualified veterans.

On the whole, VA loans are typically easier to qualify for than conventional loans. They also come with some significant financial benefits.

Despite that, only a fraction of the nation’s 17 million veterans has taken advantage of their VA loan benefits.

Who Can Use a VA Loan, and When?

The VA loan can be used while the member is still serving on active duty or after they separate from the military.

Unlike certain veterans benefits that expire after a certain amount of time, VA loan eligibility does not.

However, members can only have one VA loan at a time. They may be permitted to use the VA loan more than once, provided they have paid off their previous VA loan or otherwise satisfied the terms of the loan.

VA Loan Eligibility: Service Requirements

The VA has some initial criteria that prospective borrowers must meet to continue with the process. At this time, there are two major qualifying factors for military members or veterans:

• Your character of service or discharge rating (unless still serving) 
• When you served, and for how long

Character of Service (Discharge Rating)

Those considering a VA loan must have a character of discharge or service, must be under other than dishonorable conditions (e.g., honorable, under honorable conditions, general), or the military member must still be serving on active duty or in the National Guard or Reserves.

Service Dates and Duration to Qualify for a VA Mortgage

Service members may qualify for a VA loan if they meet the following service requirements:

• Served 181 days on active duty or three months during wartime
• Spent at least a six years in the National Guard or Reserves
• Are the spouses of a service member killed in the line of duty

Let’s look at each of these in more detail.

Qualifying Military Service for VA Loan Eligibility

VA Loan Eligibility: Wartime Service

World War II, Korean War and Vietnam War eligibility: Veterans who served in the following periods of war are eligible for a VA mortgage if they meet the service requirements listed below.

• World War II: Sept. 16, 1940-July 25, 1947
• Korean War: June 27, 1950-Jan. 31, 1955
• Vietnam War: Aug. 5, 1964-May 7, 1975

Service Requirements:

• At least 90 days active duty with an other than dishonorable discharge
• Less than 90 days of active duty if discharged for a service-connected disability

Gulf War eligibility: Veterans who served in the following time periods are eligible for a VA mortgage if they meet the service requirements listed below.

• Aug. 2, 1990-to be determined

Service Requirements:

• 24 months continuous active duty with other than dishonorable discharge
• At least 90 days active duty or completed the full term that they were ordered to active duty with other than dishonorable discharge
• At least 90 days active duty and discharged for hardship, early out, the convenience of the government, reduction in force or condition interfered with duty or a compensable service-connected disability
• Less than 90 days of active duty if discharged for a service-connected disability

VA Loan Eligibility Through Active-Duty Service or Peacetime Service

Military members currently serving on active duty are eligible for the VA loan after serving 90 consecutive days on active duty.

They must re-establish eligibility through the VA after separating from active duty.

Veterans who served on active duty must meet the following requirements to be eligible for a VA mortgage:

• 24 months continuous active duty with other than dishonorable discharge
• At least 181 days active duty or completed the full term that they were ordered to active duty with other than dishonorable discharge
• At least 181 days active duty and discharged for hardship, early out, the convenience of the government, reduction in force, condition interfered with duty or a compensable service-connected disability
• Less than 181 days of active duty if discharged for a service-connected disability

Military members currently serving on active duty will need to produce a letter from their branch of service stating they meet service requirements.

Guard or Reserve VA Loan Eligibility

To be eligible for the VA Loan through service in the Guard or Reserves, members must serve a complete six-year term.

Members of the Reserve Component are eligible to apply for a VA Loan if they meet one of the following:

• Served at least 90 consecutive days on active duty during wartime
• Served at least 181 consecutive days on active duty during peacetime
• Completed six years of in-service time with their Guard or Reserve Unit (these must be “good years” to qualify)

Note: You will need to produce proof of active-duty service during wartime to be eligible under these terms You can normally do this by providing a copy of your DD Form 214.

You can also give a copy of a statement of service that includes the following information:

• Full name, date of birth and Social Security number
• Date entered into military service
• Total number of creditable years of service (also known in the Guard and Reserves as “good years”)
• Duration of lost time
• Unit command information, including name, location and contact information

The statement of service should be signed by your unit commander, their adjutant or a personnel officer.

Eligibility for Military Widows and Dependents

Until recently, surviving spouses were only eligible for VA loan benefits for a short time period.

The Honoring America’s Veterans and Caring for Camp Lejeune Families Act (H.R. 1627) extended benefits to surviving spouses of veterans, veterans with a service-connected disability and POWs for up to 10 years after the death of the service member (disability thresholds apply).

VA loans are intended to finance a house that serves as a primary residence.

This becomes difficult for certain service members, including dual-military couples and single parents.

The new law allows a dependent to occupy the home to satisfy owner-occupancy requirements, provided specific criteria are met.

Certificate of Eligibility Required to Obtain a VA Loan

Those who fall into one of those categories must then fill out a certificate of eligibility, or COE. This is an official VA document certifying your ability to participate in the program.

Applicants can obtain these through the VA directly or through a VA broker.

VA officials review the veteran’s certificate of eligibility and ultimately determine whether a prospective borrower can participate.

Credit Score Required for a VA Loan

The VA loan guaranty program doesn’t have explicit income or credit standards to qualify. But the VA does not issue loans — it guarantees them.

VA-approved lenders have their own lending standards, and military members and veterans must qualify for the loan based on their financial data.

Most lenders will require a credit score of at least 620.

They will also consider other factors such as income, debt-to-income level, credit history, the appraised value of the home and more.

VA Loan Limits

Until 2020, the VA used a loan-limit system that limited how much a participant could borrow or refinance with a VA guarantee. After 2020, veterans and service members with their full entitlement no longer have a loan limit. 

Those who don’t have their full entitlement are still subject to loan limits. In 2022, throughout most of the country, qualified borrowers can get up to $647,200 without putting down a single dollar.

That limit is higher in some of the nation’s more expensive housing markets. In some areas, you can use a VA Loan to purchase a four-unit home for over $1 million.

Except in those high-cost areas, VA borrowers looking for a house that costs more than $647,200 must make a down payment to cover a percentage of the amount above the loan limit, unless they have their full loan entitlement.

For more information about VA Loans eligibility and financing, visit our VA loan lender page, where you can learn more about your VA loan options.

Equal housing opportunity. The Department of Veterans Affairs affirmatively administers the VA Home Loan Program by assuring that all veterans are given an equal opportunity to buy homes with VA assistance. Federal law requires all VA Home Loan Program participants — builders, brokers and lenders offering housing for sale with VA financing — must comply with fair housing laws and may not discriminate based on the race, color, religion, sex, handicap, familial status or national origin of the veteran.

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