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VA Loan Eligibility & Benefits in 2021

TAGS: VA Loan ProgramMortgage Approval & EligibilityLoan Types
VA Loan Eligibility & Benefits in 2021
Article Excerpt

Review 2021's VA loan eligibility requirements and benefits for vets and active service members. Use our mortgage calculator, learn about funding fees and COEs, and more.

Veterans and active service members have the very best mortgage benefits available to them - deservedly so. But the eligibility requirements are stringent on who qualifies. Let’s take a look at the updated 2021 information on VA loans.

2021 Requirements for VA Loan Eligibility

VA loans can help borrowers purchase or refinance a home. They aren’t known for being simple. So, we’ve organized the service requirements into easy-to-understand groups here.

If you’re currently on active duty, you’ll need to have served at least 90 continuous days before becoming eligible for a VA loan.

90 total days

If you served between the following dates, you’ll need to have served for 90 total days. You may be eligible for a VA loan if you served less than 90 days if you were discharged due to a service-connected disability.

  • Sept. 16, 1940 - July 25, 1947 (WWII)
  • June 27, 1950, - Jan. 31, 1955 (Korean War)
  • Aug. 5, 1964, - May 7, 1975 (Vietnam War), or Feb. 28, 1961 - May 7, 1975, if you served in the Republic of Vietnam

However, if you served between Aug. 2, 1990 to the present, you must satisfy at least one of the following:

  • 24 continuous months of service
  • The full period for which you were called or ordered to active duty (at least 90 days)
  • At least 90 days if you were discharged for a hardship, reduction in force, or for convenience of the government.
  • Less than 90 days if you were discharged for a service-connected disability.

181 continuous days

If you served between the following dates, you’ll need to have served for 181 continuous days. Again, if you were discharged for a service-connected disability, you may qualify for a VA loan with less than 181 continuous days.

  • July 26, 1947 - June 26, 1950 (post-WWII period)
  • Feb 1, 1955 - Aug 4, 1964 (post-Korean War period)
  • May 8, 1975 - Sept. 7, 1980 (post-Vietnam War period), or between May 8, 1975 - Oct. 16, 1981, if you served as an officer

But if you separated from service after Sep. 7, 1980 as a non-officer or after Oct. 16, 1981 as an officer, you must satisfy at least one of the following:

  • 24 continuous months of service
  • The full period for which you were called or ordered to active duty (at least 181 days)
  • At least 181 days if you were discharged for a hardship, reduction in force, or for convenience of the government.
  • Less than 181 days if you were discharged for a service-connected disability

Finally, if you served between Sep. 8, 1980 - Aug. 1, 1990 as a non-officer, or between Oct. 17, 1981 - Aug. 1, 1990 as an officer, you must satisfy at least one of the following:

  • 24 continuous months of service
  • The full period for which you were called or ordered to active duty (at least 181 days)

Surviving Spouse Requirements

Spouses can also buy and refinance homes with the VA loan program. In order for the spouse to qualify, the veteran needs to meet at least one of these requirements:

  • Is missing in action
  • Is a prisoner of war
  • Died while in service or died from a service-connected disability and you did not remarry before you were 57 years old or before December 16, 2003

Speak with an experienced VA lender to get started on applying for a VA loan. They’ll help you obtain a Certificate of Eligibility and to apply for Dependency & Indemnity Compensation (DIC) if you are not already receiving it.

National Guard and Reserve Eligibility

Members of the National Guard and Reserves may also be eligible for VA home loans.

  • If you served between Aug. 2, 1990 to the present (Gulf War), you’ll need 90 days of active-duty service to be eligible for a VA loan.

No matter when you served - if you served six creditable years in the Selected Reserve or National guard and you also fulfill any of the following requirements, you may be eligible:

  • Were discharged honorably
  • Were placed on the retired list
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable, or
  • Continue to serve in the Selected Reserve

You may not be eligible for a VA loan if you received a dishonorable discharge. However, a discharge upgrade may allow you to become eligible. If you believe your discharge was connected to any of these categories, you can apply for a discharge upgrade:

  • Mental health conditions, including PTSD
  • Traumatic brain injury
  • Sexual assault or harassment during military service
  • Sexual orientation (including under the Don’t Ask, Don’t Tell policy)

This eligibility information is compiled from VA.gov.

Credit Score Requirement

Under normal circumstances, a credit score of 580 or higher is required to qualify for a VA loan. COVID-19 caused some lenders to temporarily increase their minimum qualifying credit scores for VA loans.

Generally speaking, higher credit scores will qualify for better interest rates.

va loan eligibility requirements

2021 VA Loan Limits

A loan limit is a ceiling of how much you can borrow. In 2020, the VA removed home loan limits. There has been no change in 2021.

If you’ve never used your home loan benefit before or you’ve already paid a previous VA loan in full, the VA will not impose a loan limit on you.

However, your lender still needs to approve you based on credit history, income, and assets. The VA does not set hard limits on loan amounts, but that doesn’t mean your lender will approve you for an unlimited amount.

What is a certificate of eligibility?

In order to obtain a VA loan, you’ll need a Certificate of Eligibility (COE). A COE verifies your VA loan eligibility. This document is required to complete your home purchase with a VA loan.

As part of the pre-approval process, our mortgage advisors are happy to help obtain your COE. Get started now.

VA Loan Benefits

Overall, the VA loan program has the very best benefits compared to all other loan options. Each of the VA’s benefits can be found in other programs, but no other program offers all of them together.

No down payment requirement with full VA entitlement

The VA program is a zero-down loan option if you have full VA entitlement. Your COE will tell you if you’re eligible for zero-down.

The average VA borrower owns less than $9,000 in assets. 82% of veteran borrowers make no down payment on their home purchase.

» READ MORE: How Much Should You Put Down on a House?

No private mortgage insurance (PMI) required

As a VA loan borrower, you won’t pay a cent towards PMI!

An average Texas homebuyer may pay around $100 per month in private mortgage insurance (PMI). Homebuyers using the FHA program will pay PMI for the entire life of the loan. Even conventional loan borrowers will pay PMI until they reach 20% equity in the home.

» READ MORE: Mortgage Insurance Costs, Rules, & FAQs

Lower closing costs with seller concessions allowed

To help remove even more barriers for veterans becoming homeowners, the VA loan comes with lower closing costs. The home seller can also help you pay for them.

» READ MORE: Who Pays for Which Closing Costs on a VA Loan?

Fixed- and adjustable- rates available

What's the difference between a fixed-rate and an adjustable-rate mortgage? Your mortgage adviser will educate you on which option is best for your scenario.

» READ MORE: What’s the Difference Between a Fixed and Adjustable Rate?
» LEARN: When Should You Choose an Adjustable-Rate Mortgage?
va loan benefits

Mortgage Calculator

2021 VA Loan Funding Fee

Although there is no down payment required, the VA funding fee is a one-time payment that you’ll make on a VA home loan. The funding fee is a percentage of your loan amount. How much you pay depends on your down payment amount and if you’re using your VA home loan benefit for the first time.

If your down payment is:

Your funding fee =

First use

Less than 5%

2.3%

5% or more

1.65%

10% or more

1.4%

After first use

Less than 5%

3.6%

5% or more

1.65%

10% or more

1.4%

VA loans allow for the home seller to help pay for several different parts of your mortgage closing costs. The funding fee is one of the costs that can be negotiated with your seller.

VA Funding Fee Exemptions

Per the VA website, there are exemptions for funding fees. You will not have to pay a VA funding fee if any of the below is true.

  • You're receiving VA compensation for a service-connected disability.
  • You're eligible to receive VA compensation for a service-connected disability, but you’re receiving retirement or active-duty pay instead.
  • You're the surviving spouse of a Veteran who died in service or from a service-connected disability, or who was totally disabled, and you're receiving Dependency and Indemnity Compensation (DIC).
  • You're a service member with a proposed or memorandum rating, before the loan closing date, saying you're eligible to get compensation because of a pre-discharge claim
  • You're a service member on active duty who before or on the loan closing date provides evidence of having received the Purple Heart.

How many times can you use a VA loan?

There’s no limit to the number of times you can use your VA loan benefit. If you purchase a home using a VA loan and pay off its loan completely, your entitlement is ready to be reused.

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Check Your VA Loan Eligibility

We’re veteran-led and veteran proud. VA loans require specific education and know-how on the part of your mortgage adviser and real estate agent. We’re here to help.

Check your VA loan eligibility. Speak with a Military Mortgage Specialist today.