If you’re a veteran looking to buy a home, taking out a VA loan could be an excellent option for you. This government-backed loan comes with low interest rates and 100% financing. VA mortgage loans can also help eligible borrowers buy a home with zero money down. In order to take out a VA loan, you’ll need to meet mortgage lender qualifications, including minimum credit score and debt-to-income ratio (DTI) requirements.
Before you can begin the application process, you need to receive your VA loan Certificate of Eligibility (COE). A COE is a document that shows your mortgage lender that you’re eligible for a VA loan.
Let’s take a look at what exactly a VA COE is and how to get a VA Certificate of Eligibility in the home buying process.
To obtain a VA loan, you’ll need to receive a VA Certificate of Eligibility, or VA COE, which verifies your status as a qualifying veteran, service member or surviving spouse. You can receive this form from the U.S. Department of Veterans Affairs (VA).
A VA loan COE proves to your lender that you meet the requirements to take out a VA loan. Some VA loan requirements include the following:
VA loans are offered to military service members including veterans, active duty service members, National Guard and Reserve members and qualifying spouses. However, the requirements differ depending on whether you served during peacetime or active wartime.
Requirements also change if you were discharged due to a service-related disability. Here is an overview of each of these eligibility requirements:
You can apply for a VA COE online or by printing out the request form. You can also work directly with your lender to approve VA COE requests, though not all lenders are VA-approved lenders or service VA loans.
It’s recommended that borrowers provide proof of service when applying for a VA COE. That includes the following documentation:
Without a COE, your lender cannot verify that you qualify for a VA loan. According to your Certificate of Eligibility, you have a certain amount of entitlement, but what exactly does that mean?
Your VA loan entitlement is the amount the VA is willing to guarantee if you default on the loan. If you’ve never taken out a VA loan before or paid off a previous VA loan, you should receive full entitlement. Your entitlement will be reduced if you’re currently paying back a VA loan or have paid off the loan and still own the house you purchased it with.
If you’re looking to refinance your VA loan, you’ll need to show your lender your VA Certificate of Eligibility. This is the case for refinance options like a VA Streamline refinance (also called a VA IRRRL) and a VA cash-out refinance.
When applying to refinance, you’ll need to either provide the original COE you used to secure your VA home loan or request a new copy through your lender. Once your lender has your VA COE form, you’ll continue through the remaining steps of the refinance process.
Eligible borrowers need to receive a VA COE in order to take out a VA loan. Do you have additional questions about the process? Check out a list of frequently asked questions below.
Here are a few reasons your lender may not be able to request a COE:
It can take up to 6 weeks to receive a COE after you’ve submitted all the documentation and provided the relevant information. If you submit your VA COE through your lender or your eBenefits portal, you could receive it within minutes. You may get approved for a VA loan as soon as you receive your COE.
A VA COE doesn’t expire, but there may be a situation where you need to update or receive a new COE. For instance, if you received your COE while on active duty, you may need to update it after discharge.
Unfortunately, having a VA COE doesn’t guarantee VA home loan approval. A COE only authorizes your lender to review your VA loan application. Keep in mind, VA COEs are specifically for home loans and don’t apply to other VA-related benefits.
Yes, you’ll need a COE to be eligible for the Native American Direct Loan (NADL) program. The NADL program helps Native American veterans who live on federal trust land obtain a mortgage. Your tribal government will also need a Memorandum of Understanding agreement that outlines how the program will work on the reservation land.
Before you can apply for a VA loan, you’ll need to receive your VA COE. Your COE shows that you meet the service requirements to qualify for a VA home loan. Check out our VA loan application so you can make sure you have everything you need to apply.
Molly Grace is a staff writer focusing on mortgages, personal finance and homeownership. She has a B.A. in journalism from Indiana University. You can follow her on Twitter @themollygrace.
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