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VA Loan Eligibility & Benefits in 2020

TAGS: VA Loan ProgramMortgage Approval & Eligibility
VA Loan Eligibility & Benefits in 2020
Article Excerpt

Review 2020'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 2020 information on VA loans.

2020 Requirements for VA Loan Eligibility

VA loans can help borrowers purchase or refinance a home. Your eligibility for a VA loan is mostly determined by when you served and for how long, and by your credit score.

VA loans aren’t known for being super simple and straightforward. So we’ve organized the service requirements by groups.

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

  • September 16, 1940 - July 25, 1947 (WWII)
  • June 27, 1950, - January 31, 1955 (Korean War)
  • August 5, 1964, - May 7, 1975 (Vietnam War), or February 28, 1961 - May 7, 1975, if you served in the Republic of Vietnam

However, if you served between August 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)
  • February 1, 1955 - August 4, 1964 (post-Korean War period)
  • May 8, 1975 - September 7, 1980 (post-Vietnam War period), or between May 8, 1975 - October 16, 1981, if you served as an officer

But if you separated from service after September 7, 1980, as a non-officer or after October 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 September 8, 1980 - August 1, 1990, as a non-officer, or between October 17, 1981 - August 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 August 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

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

2020 VA Loan Limits

A loan limit is a ceiling of how much you can borrow. If you have full entitlement, there is no VA loan limit in 2020. 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.

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.

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

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

» 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

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?
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2020 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.

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.

On a purchase loan, the VA funding fee can range from the low 1’s to the mid 3’s. Check with your mortgage adviser to see what your funding fee would be.

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.