A certificate of eligibility (COE) issued by the Department of Veteran Affairs shows your lender that you qualify under the VA home loan program based on meeting the following requirements:

Veterans who served August 2, 1990 to the present, one of the following criteria must be met:

• 24 continuous months of service, or
• The full period (at least 90 days) for which you were called or ordered to active duty, or satisfy your call to active duty the entire period (at least 181 days) for which you were called to active duty.
• At least 90 days if you were discharged for hardship, a reduction in force, or for convenience of the government, or
• Less than 90 days if you were discharged due to a service-connected disability.

Active-duty Servicemembers

• Must complete 90 days of continuous service.

National Guard

• At least 90 days of non-training active-duty service, or
• At least 90 days of active-duty service including at least 30 consecutive days (your DD214 must show 32 USC sections 316, 502, 503, 504, or 505 activation), or
• 6 creditable years in the National Guard and you were discharged honorably or placed on the retired list.

Reservists

• At least 90 days of non-training active-duty service, or
• 6 creditable years in the Selected Reserve, and one of these descriptions is true for you
  • You were discharged honorably, or
  • You were placed on the retired list, or
  • You were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable, or
  • You continue to serve in the Selected Reserve.
• Must have and complete six years of duty. Individuals who’ve completed fewer than six years may be eligible if discharged for a service-connected disability.

Surviving spouses of qualified veterans and veterans who are missing in action or prisoners of war (POW) are eligible to receive a COE.

An interest rate is what you pay each year to borrow money. It doesn’t reflect any fees incurred. The APR, or annual percentage rate, reflects a broader borrowing cost. It includes VA loan interest rates plus any fees tied to obtaining the loan such as origination fees. APR is one measure you can use to compare mortgage offers.

It’s a path to lowering VA loan interest rates. Discount points enable you to pay interest upfront in exchange for a lower rate over a loan’s lifetime. But points aren’t for everyone. It works best for borrowers who plan to own the home for a longer time. Ask your loan officer if the math works for you.

There are two types of entitlement under the VA loan program:

• Full entitlement
• Remaining Entitlement

Full entitlement is offered to those qualifying servicemembers who haven’t used their VA home loan benefit in the past. Full entitlement can be restored when you sell your property, pay your VA-backed loan in full, or repay any claim the VA has paid on either a default, foreclosure, or short sale. As of 2020, eligible veterans, servicemembers, and surviving spouses with full entitlement no longer have limits on loans over $144,000.

A zero down payment option is available unless the purchase price exceeds the reasonable value of the property.

Yes. While a VA loan doesn’t have an upfront mortgage insurance premium similar to an FHA loan, there’s a one-time funding fee paid to the Department of Veterans Affairs that supports the VA loan program. The amount of the one-time funding fee depends on veteran designation, the amount of the down payment, loan type, and whether you’ve received a VA loan in the past. Below are several scenarios for those seeking their first VA loan for a purchase transaction:

• Down payment less than 5% of purchase price: 2.3% upfront funding fee
• Down payment between 5% – 10% of purchase price: 1.65% upfront funding fee.
• Down payment at or above 10% of purchase price: 1.4% upfront funding fee.

For a cash-out refi of an existing VA loan, the funding fee will be 3.6%.

For refinancing an existing VA loan into a new VA loan (with no cash out), there’s a Streamline VA refi with a funding fee of just 0.5% of the loan amount.

Keep in mind that there may be other fees associated with your VA loan. These include appraisal costs, lender fees, taxes, and third-party settlement costs.

You may be eligible for a funding fee exemption under a few scenarios, which may include:

• You are eligible to receive or you are currently receiving VA disability income related to a disability from your military service.
• You have received a purple heart.
• You have a memorandum rating before the closing date that includes a pre-discharge claim.
• You are the surviving spouse of a Veteran who died in service or as a result of a disability from military service and receiving Dependency and Indemnity Compensation (DIC).
• Borrowers with a disability rating of at least 10 percent are exempt from the VA funding fee.
• You may be eligible to receive a refund if you have a pending disability claim that was approved after your closing.

To determine if you qualify, your lender will complete a Form 26-8937 to verify you are receiving disability payments. In some cases, your Certificate of Eligibility will already list your funding fee waiver status.

Yes. VA loans permit gift funds toward down payment and closing costs. However, the gifts must come from a close relationship with the borrower.

Mortgage lenders do (mortgage companies and banks).

No. The purpose of the VA loan, your credit score, the loan-to-value ratio, and other factors affect the interest rate. Please review the complete VA loan interest rates table above.

VA loan interest rates are often lower than conventional mortgages but will vary depending upon the factors listed under “Key Factors | Interest Rates” above. VA mortgage loans are partially guaranteed by the VA, which reduces the risk to the lender when issuing the loan. The VA loan guaranty promises a portion of the loan will be repaid to the VA approved lender should the borrower go into default or foreclosure.

VA loan interest rates can potentially change daily depending on current market conditions.

Lenders may set their own minimum credit score requirements as the VA has not established a minimum credit score. However, lenders generally require a minimum credit score of 580. Strong Home Mortgage provides VA loans to eligible consumers with a credit score of 580 or higher.

Yes. However, you must wait two years after a dismissal date for chapter 7 bankruptcy and one year after filing a Chapter 13 bankruptcy.

Since January 2020, all eligible borrowers have been able to use the maximum loan amount they qualify for without putting any money down. Prior to 2020, VA entitlement essentially capped VA loans at the same dollar amount as conforming loan limits.

You must occupy the home for at least one year within the first 60 days after closing. While the program is designed to promote homeownership, it also prevents veterans from purchasing homes for vacation or investment rentals using a VA loan.

“Locking” your rate means your interest rate won’t change between the offer and closing, as long as you close within the specified time frame and there are no changes to your application. You may lock your rate when you’re comfortable with the offered interest rate and don’t want it to rise any further. Locks generally expire in 30 to 60 days. To lock VA loan interest rates, please contact us. Locks vary based on the type of loan, market conditions, and more.