Can a Reservist Get a VA Home Loan?

The VA home loan program provides a significant benefit designed to help eligible service members, Veterans, and certain surviving spouses achieve homeownership. This program offers favorable terms, such as no down payment requirements and competitive interest rates, making home buying more accessible for those who have served. The purpose of these loans is to acknowledge military service by providing a tangible financial advantage in the housing market. Understanding the specific criteria for eligibility is an initial step for anyone considering this valuable benefit.

Eligibility Requirements for Reservists

Reservists and National Guard members can qualify for a VA home loan, though their eligibility requirements differ from those for active-duty service members. Generally, a minimum of six years of honorable service in the Selected Reserve or National Guard is required. This service includes active duty for training, annual training, and weekend drills. Alternatively, eligibility may be established with at least 90 days of non-training active-duty service.

Specific conditions can lead to eligibility before the six-year mark. If a Reservist or National Guard member was called to active duty under Title 10 and served at least 90 consecutive days, they may gain eligibility. Discharge due to a service-connected disability can also qualify an individual for a VA loan, regardless of the length of service. Recent legislative changes have expanded eligibility to National Guard members activated under Title 32 orders, requiring 90 cumulative days of full-time duty, with at least 30 being consecutive. An honorable discharge is generally required for Reservists and National Guard members to qualify for VA home loan benefits.

Obtaining Your Certificate of Eligibility

A Certificate of Eligibility (COE) is a document from the Department of Veterans Affairs that confirms an individual’s eligibility for a VA loan and serves as official proof to lenders of military service requirements. The COE also details the available VA loan entitlement, which is the amount the VA will guarantee to the lender, and indicates if the applicant is exempt from the VA Funding Fee. While a COE is necessary before closing on a VA loan, it is not always required to start the loan process or obtain a preapproval letter.

To apply for a COE, Reservists and National Guard members generally need to provide specific documentation to verify their service. For those who have been discharged, a DD-214 (Certificate of Release or Discharge From Active Duty) is often required if applicable to their service. Instead, they typically submit their latest annual retirement points summary along with evidence of honorable service, such as NGB Form 22 (Report of Separation and Record of Service) or NGB Form 23 points statement. Current active members of the Reserves or National Guard will need a signed statement of service from their commanding officer, adjutant, or personnel officer, which includes their full name, Social Security number, date of birth, date of entry, total creditable years of service, and the duration of any lost time.

There are several methods for obtaining a COE. The quickest way is often through a VA-approved lender, who can access the Automated Certificate of Eligibility (ACE) database and secure the COE within seconds using basic information like a Social Security number and birth date. Another option is to apply online via the VA’s eBenefits portal, which can be a fast process if eligibility is easily verifiable. Alternatively, applicants can print and mail VA Form 26-1880, “Request for Certificate of Eligibility,” to the appropriate VA regional loan center. This method takes longer, often 4-6 weeks for processing.

Applying for the VA Loan

Once the Certificate of Eligibility (COE) is secured, the next phase involves applying for the VA loan with a VA-approved lender. This process begins with finding a lender experienced in VA loans, as they can guide the borrower through the process. The lender will review the COE to confirm eligibility and then assess the borrower’s financial qualifications, including credit history, income, and debt-to-income ratio.

The VA appraisal is a step in the loan application that is distinct from a home inspection. The VA requires an appraisal conducted by a VA-approved fee appraiser to determine the property’s fair market value and ensure it meets Minimum Property Requirements (MPRs). These MPRs ensure the home is safe, structurally sound, and sanitary. The appraisal process takes one to two weeks, and the appraiser’s report is submitted to the VA and then reviewed by the lender. If the appraised value is lower than the purchase price, the buyer may need to pay the difference or negotiate with the seller.

After the appraisal and all required documentation are submitted, the loan enters the underwriting phase. Underwriting involves a thorough review of the borrower’s financial standing, including creditworthiness, income stability, and ability to repay the loan. Underwriting takes a few weeks, with outcomes ranging from conditional approval to denial.

Once the loan is approved, the final step is closing, where all documents are signed, and ownership of the home is transferred. VA loans have closing costs, which range from 1% to 6% of the loan amount, including the VA funding fee.