Qualification requirements for a VA Loan

Here are some basic qualification requirements set forth by the VA in the 2019 Lenders Handbook – VA Pamphlet 26-7.

The VA has 4 very simple requirements to be able to leverage your VA benefits to purchase a home. This is so simple, it takes a Loan Officer to complicate it.

VA is a benefit to the Veteran. The VA loan encourages lenders to make the loan to all qualified veterans who qualify. The VA leaves it up to the institution lending the money to use good judgment when it comes to the vague VA loan guidelines.

  1. Must have suitable credit
  2. Must have adequate income
  3. Must have valid Certificate of Eligibility
  4. Property must meet Minimum Property Requirements (MPRs)

Literally that is it per the VA Loan Guidelines. Now how do you define suitable credit and adequate income? Well, that is where it can get complicated because it is up to the underwriter to use their judgement to determine suitable and adequate.

Although not always black and white, here are some of the general rules of thumb when it comes to the VA loan requirements.

  • Must have suitable credit
    • The VA does not have a minimum credit score requirement… however, there is content requirement
    • Borrower must meet lender standards
    • The VA likes 640+ scores (although not necessary if strong compensating factors)
    • If you had a derogatory credit event, you must re-establish credit
      • Satisfactory credit is generally considered to be reestablished after satisfactory payments for 12 months after the date the last derogatory credit item was satisfied.
  • Must have adequate income
    • Your total debts plus a new house need to be lower than 45% of your total income.
    • Your income must be stable and reliable
    • Anticipated to continue during the foreseeable future
    • sufficient in amount

If you have any additional questions regarding if you will qualify for a VA loan, give us a call today! (615) 439-0885.