Millions of veterans and active military members are eligible for what’s arguably the most powerful mortgage option on the market. VA loans feature $0 down payment, no mortgage insurance and more flexible and forgiving requirements.
To be sure, VA loans aren’t the answer for every veteran. But they continue to make a huge difference, especially for those who might otherwise struggle to land a home loan.
Here’s a look at five basic steps to getting a VA home loan.
1. Getting Your Credit in Order
The first thing you want to do is make an effort to understand and improve your credit. When shopping for home loans, it can help create realistic expectations and ensure you get the best deal possible.
The Department of Veterans Affairs doesn’t set a credit score requirement for this program, but the government also isn’t making the loan. Instead, the VA insures – or guarantees – a portion of each loan for the lender. Because lenders assume most of the risk, they can add guidelines, or “overlays,” such as a minimum FICO score.
Different lenders can have different credit cutoffs, but a 620 FICO score (on a scale of 300 to 850) is fairly representative. Generally, that’s considered just “fair” credit, which is another big benefit to homebuyers.
2. Determining Your Eligibility
Eligibility doesn’t guarantee you a loan, but you also can’t get one unless you meet the basic service requirements for a VA Loan. There are time-in-service requirements that cover wartime and peacetime for regular military, National Guard and Reserves.
Generally, you may be eligible if you served:
- 90 consecutive days on active duty during wartime
- 181 consecutive days on active duty during peacetime
- 6 years in the National Guard or Reserves, or
- You’re the surviving spouse of a veteran who died in the line of duty or of a service-connected disability
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