VA Loan Requirements and VA Loan Guidelines – For 2020
The main thing to understand about VA loan requirements is that it is a benefits program for Veterans and actually has very loose guidelines. The VA actually encourages lenders find a way to make loans to all qualified veterans. The VA leaves most of the requirements up to the institution to use good judgment.
Here are the main VA Loan Requirements
- The Veteran must have suitable credit
- You must have adequate income
- Must have valid Certificate of Eligibility
- Property must meet Minimum Property Requirements (MPRs)
Literally that is it, it’s that simple. As a result, 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. For that reason, I would like to educate you on how the VA sets out guidelines to lenders.
1. VA Loan must Have Suitable Credit
- Here is a blog I did going into detail about VA Loan Credit Requirements
- 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.
2. Must have adequate income
- Here is a blog I did explaining how the Va defines 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
3. Valid Certificate of Eligibility (COE)
Veterans must have a valid COE before I even issue an approval letter. Without a valid COE, we do not have a VA loan. Here is the link to the VA website for you to obtain a COE. If you have issues obtaining one, we can help you although it is much faster for the Veteran to obtain it themselves. Link for COE
4. Minimum Property Requirements
The VA also says that your property must meet certain Minimum Property Requirements (MPRs) in order for you to be able to use your VA benefits to purchase it. Here is the link to understand more about the MPRs. VA Minimum Property Requirements Here are a few basics:
- Property must be Safe, Sound and Sanitary
- Property must adhere to local standards
- Functional mechanical systems
- Must have reasonable future utility, durability, economic life
VA Loan Guidelines
This page is intended to cover the basics of the VA Loan. Kinda like a 20,000 ft view. Each lender will have overlays in addition to the set VA Loan Guidelines. Here are the actual VA Loan Requirements requirements and VA Loan Guidelines set forth by the VA in the 2019 Lenders Handbook – VA Pamphlet 26-7.
If you have any additional questions regarding if you will qualify for a VA loan, give us a call today! (615) 439-0885.