Being approved for a VA loan might be easier than you think. The first step is to understand the essential VA loan requirements to know what you could expect once you get approved. In general, all lenders approved to offer VA loans are looking for these four essential requirements:
VA Loan Requirement #1: Entitlement and Eligibility
This means that you should have fully satisfied the VA military service requirements and hold sufficient “entitlement.” Generally speaking, the term entitlement refers to how much the Veterans Affairs (VA) would guarantee your loan. For instance, full entitlement is sufficient for a VA-backed home loan amounting to $424,100, or higher in select high-cost states and counties.
VA Loan Requirement #2: Owner Occupancy
Under the law, you should occupy the property you want the VA loan program to fund. You should verify that you would live in the property within a specific time frame, usually within 60 days following closing. If you’re deployed somewhere far from your home, Primary Residential Mortgage, Inc. explains that you could ask for an extension of up to a year before moving in. If you’re married, your spouse could satisfy this owner occupancy requirement in your stead.
VA Loan Requirement #3: Eligibility of the Property
Eligible properties include single-family houses, multi-family houses (up to four units for every borrower), townhouses, and condominium units approved by the VA. There might be extra qualifications requirements depending on the type of property you want to finance. The VA likewise guarantees to fund for manufactured or modular houses, provided that they’re connected to a permanent foundation. Do note however that not all VA-approved lenders offer loans for manufactured houses.
VA Loan Requirement #4: Credit and Income
All veterans (if joint, and co-borrowers) should have sufficient and steady income and good credit. The VA gives lenders flexibility to determine if they could take a chance on a borrower, as long as they fit VA requirements. Ideally, you should have adequate residual income for covering common living expenses and a debt to income or DTI ratio of 41% and below.
Understanding these four essential VA loan approval requirements is a great step toward securing a VA loan. Although other requirements might apply, based on the lender and the specific VA loan program, when you meet these four requirements, you increase your chances of getting approved. Do take note that loan amounts significantly differ according to your capacity to pay and your entitlement.