2024 VA loan requirements

Who qualifies for a VA loan?

Military and National Guard members, reservists, veterans and surviving spouses of military members who have died due to a service-related injury or incident or are missing in action all qualify for a VA loan.

Certain other individuals might qualify, such as a U.S. citizen who served in an Allied force during World War II or an officer of the National Oceanic and Atmospheric Administration.

Children of military service members do not qualify for VA loans unless they join the military themselves.

VA loan guidelines

• 90 days of active service during wartime, or
• 181 continuous days of active service during peacetime, or
• Six years of service in the National Guard or Selected Reserve, or
• Surviving spouses of service members who haven't remarried

Requirements to get a VA loan

To be eligible for a VA home loan, you must be an active-duty or retired member of the military, or a surviving spouse of a military member. You will also need to obtain a Certificate of Eligibility (COE) from the VA.

Individual lenders may have additional requirements, such as credit score and income requirements.

Income requirements

"The income requirements for a VA loan are designed to ensure that borrowers have a stable, reliable income that will allow them to meet their monthly mortgage payments,” said Dennis Shirshikov, head of content at Awning, a resource for real estate investors.

“Unlike conventional loans, VA loans don’t have a specific minimum income threshold. Instead, they require borrowers to have a 'residual income,' which is the amount of money left over each month after all major expenses are paid."

The criteria for residual income varies, depending on factors such as the number of individuals residing in the property, the loan amount and the geographical region where the property is situated. Regions with lower living costs, such as the Midwest and South, typically have lower residual income requirements compared to higher-cost areas like the Northwest and West.

For instance, a single individual residing in a home in the South might need to demonstrate a residual income of at least $400, whereas a family of five in California might be required to have over $1,000 in residual income.

Credit score requirements

The VA does not enforce a minimum credit score requirement for VA loans. However, most mortgage lenders establish their own credit score thresholds.

While the minimum score for a traditional mortgage typically hovers around 620, given the government's guarantee, VA lenders may be more inclined to extend a loan to individuals with a lower credit score. Some lenders, for instance, establish their credit score benchmarks for government-backed loans at 580 or even lower.

Debt-to-income ratio requirements

Many VA home loans adhere to a debt-to-income (DTI) ratio benchmark of 41%, which generally surpasses what is typically found for conventional loans. This implies that your overall debt, inclusive of your mortgage, should not exceed 41% of your total income.

Depending on individual circumstances, certain lenders may consider exceeding this limit, but it usually necessitates a higher residual income.

Down payment requirements

The primary advantage of securing a VA loan is the opportunity to fund the entire home price, enabling you to forgo a down payment. Many conventional mortgages and other government-backed home loans typically require a down payment ranging from 3% to 20%.

Although the absence of a down payment requirement is a distinctive feature of a VA loan, it's best to make a down payment if you have the financial means to do so. A higher initial payment translates to a reduced need for financing, ultimately leading to decreased interest payments over the duration of the loan.

» MORE: Advantages of a VA loan down payment

Property requirements

The VA loan program is designed to help veterans and service members purchase safe and affordable homes. For you to be eligible for a VA loan, the property must meet certain requirements, known as minimum property requirements (MPRs). MPRs are in place to protect veterans and ensure they purchase a home that is structurally sound and suitable for habitation.

Here are the key MPRs for VA loans:

• Adequate living space: The property must have enough space to comfortably accommodate the occupants, including bedrooms, bathrooms, a kitchen and a living area.
• Safe access: The property must be accessible from a public or private road.
• Compliance with zoning ordinances: The property must comply with all local zoning laws and regulations.
• Functional electrical system: The property must have a working electrical system with no exposed wiring.
• Permanent heating: The property must have a permanent heating system.
• Continuous supply of safe water: The property must have a continuous supply of clean water for drinking, bathing and sanitary purposes.
• Structural soundness: The property must be structurally sound and free of defects such as poor workmanship, settlement, leaks, decay and termite infestations.
• Durable roof: The property must have a durable roof that prevents water from entering.

» MORE: Home inspection checklist

Other VA loan requirements

VA loans have several alternative options that cater to specific needs. These options provide financial assistance and support to veterans with circumstances that differ from others.

Native American Direct Loan

The Native American Direct Loan (NADL) program helps eligible Native American veterans finance the purchase, construction or improvement of homes on federal trust land. It also allows veterans to refinance a prior NADL loan to reduce the interest rate. These loans eliminate the need for a down payment or private mortgage insurance.

To be eligible for an NADL, you must:

• Be a Native American veteran or a non-Native American veteran married to a Native American
• Have a valid VA COE
• Meet VA credit standards
• Have proof that you make enough money to cover the mortgage payments and other costs of owning a home
• Live in the home you are using the NADL to purchase, build or improve

Your tribal government must also have an agreement or Memorandum of Understanding with the VA detailing how the program will work on its trust lands.

Disability housing grants

Disability housing grants are vital resources that enable individuals with disabilities to obtain, adapt or modify homes according to their specific needs.

Specially Adapted Housing Grant

The Specially Adapted Housing (SAH) grant is designed to aid in the construction or significant modification of a home, providing special adaptations for improved living conditions for veterans with service-connected disabilities.

To qualify, applicants must own or intend to own the home and live in it on a permanent basis. Additionally, they must have specific service-connected disabilities, including limb loss, blindness or severe burns.

Special Home Adaptation Grant

The Special Home Adaptation (SHA) grant assists in purchasing, building or modifying a permanent home to cater to the specific needs of individuals with qualifying disabilities.

Applicants or their family members must either own the home or have plans to do so. The qualifying disabilities under this program include the loss of both hands, certain severe burns and specific respiratory or breathing injuries.

Temporary Residence Adaptation Grant

The Temporary Residence Adaptation (TRA) grant offers funding for modifications to a temporary residence, typically a family member's home, to accommodate the physical needs of the individual with a qualifying disability.

Individuals must qualify for either the SAH or SHA grant and be temporarily residing in a family member's home that requires adaptations. Funding under the TRA grant is dependent on the specific eligibility category under the SAH or SHA program.

Bottom line

VA loans are a way for military members, veterans and their surviving spouses to secure affordable homeownership. These loans come with significant advantages, including no down payment requirements and competitive interest rates.

While VA loans have no specific income thresholds or credit score requirements, lenders may have their own criteria. You’ll also have to meet minimum criteria for military service duration, and the home needs to meet set property standards.