Can all military reserve members qualify for VA home loans? What are the minimum qualifying standards and requirements for reservists seeking a VA loan to purchase a home?
These are just a few of the often-asked questions members of the United States military reserve ask about the VA home loan program. In this article, we’ll discuss queries and topics related to this unique and valuable program.
For a quick rundown, let’s start with the short version:
Most reservists ultimately qualify for VA loans, but only after a specific time in service. If you have previously been summoned to active duty, you may already be qualified for the program. Otherwise, the program often follows the six-year guideline. This implies reservists who have served for at least six years are eligible for VA home loans.
VA Loan Eligibility Requirements for Reservists
The VA home loan program provides several appealing benefits to reservists in the United States military reservists. Military reserve benefits extend beyond eligibility for VA loans, providing reservists with various perks.
Stated below are some of the benefits of joining military reserves:
- Military reserve pay
- Military reserve retirement benefits
- Military reserve healthcare benefits
- Military reserve training benefits
- Military reserve education benefits
- Military reserve deployment benefits
- Military reserve job benefits
- Military reserve insurance benefits
- Military reserve travel benefits
- Military reserve housing benefits
Eligible reserve members can qualify for up to 100% financing, so they do not need to make a down payment for VA loan. When it comes to purchasing property, this can be a game changer.
This program also has some of the most versatile qualifying criteria of any mortgage program available today. That’s because the federal government backs VA loans. As a result, even if you’ve had VA loan credit score problems in the past, you can qualify for financing. This program appeals to people looking for VA loan with bad credit because of its flexibility.
The VA loan qualifying standards for active-duty military members are pretty straightforward. An active-duty military member must have served at least 90 days without a break in service. They are eligible for a VA loan if they fulfill this minimal criterion.
However, the eligibility requirements for military reserves are a bit more complicated.
The United States Department of Veterans Affairs published a manual named “Federal Benefits for Veterans, Dependents and Survivors.” (You can search it on Google if you’re interested.) Here’s a quote from Chapter 9, which discusses basic program eligibility:
“National Guard members and reservists qualify for a VA home loan if they have completed a minimum of six years of honorable service, served on active duty for at least 90 days, or received a service-connected disability discharge.”
So, there is a 90-day rule for individuals who have already been activated for active-duty service and a six-year guideline for those who have not.
Let’s break it down even further. A U.S. military reservist must fulfill one of the following qualifications (and “sub-conditions”) to qualify for the VA home loan guaranty benefit.
If you were on active duty for at least 90 days between August 2, 1990, and now, you’re probably qualified for a VA loan right now. The following eligibility requirements apply to all other reservists.
You have six years of Selected Reserve service plus one of the following:
- You were honorably discharged, or
- You were added to the retirement list
- You were shifted to the Standby Reserve or a Ready Reserve element other than the Selected Reserve or
- You are still serving in the Selected Reserve.
The above information was derived from the VA.gov website. If you want to understand these standards, visit their official website.
You don’t need to meet all four of the qualifications listed above. In terms of basic program eligibility, just one of these will satisfy.
For instance, an active-duty reservist who has completed at least six years of service and is presently serving in the Selected Reserve should be qualified. Similarly, a person honorably discharged after serving in the reserves for at least six years should be eligible for a VA loan.
Next Step: The Certificate of Eligibility
Assuming you are a reservist who fits the eligibility guidelines stated above, the next action to take is to get a copy of your Certificate of Eligibility (COE). The Department of Veterans Affairs issues this official document. It informs the mortgage lender that you are qualified to participate in the VA loan process based on your military reserve service and status.
The VA does not make direct loans to house purchasers. To participate in this program, you must apply through a bank or mortgage provider that offers VA loans. The government guarantees the lender, giving additional security against losses related to borrower default.
So, you receive this paperwork from the VA and provide it to your mortgage lender so that the application, underwriting, and approval process can continue.
You can request your COE from the VA online, via mail, or through your mortgage lender. Most lenders participating in this program can seek the Certificate of Eligibility directly from the VA on the borrower’s behalf.
When handling the process of a VA loan on your own, the steps will vary based on your current military reserve status. You must supply a copy of your DD-214 or equivalent official discharge papers if you have been honorably released from one of the reserve branches.
If you currently serve in the reserves (and meet the mentioned service length requirements), you must obtain a “statement of service” signed by your unit commander, adjutant, or personnel officer. In either scenario, it’s a simple procedure that should take a little time. However, you can only begin the mortgage loan application procedure once you have received your Certificate of Eligibility. This is true for both active duty and reserve members.
A Summary of Key Points
We’ve already covered a lot of useful information. Here are some essential key points you should remember from this article:
- To be eligible for a VA loan, reservists must have served for at least six years unless they were called to active service before that period.
- You could be eligible now if you were previously called up for active-duty service and served in that status for at least 90 days.
- To get started, you must receive a copy of your Certificate of Eligibility from the United States Department of Veterans Affairs.
- You can obtain the COE on your own or have it done by your lender.
- Once you have this document, you can submit your VA loan application and begin the mortgage and home-buying process.
Note: This article is part of a broader series that covers all aspects of the VA home loan program. To learn more about this subject, you can refer to our step-by-step home buying walkthrough, as well as our breakdown of the VA loan application process.