VA Purchase Benefit
Through dedicated service to our country, military service members and veterans qualify for a range of benefits earned through their service. Chief among those benefits is an opportunity to take part in the VA Home Loan program, a mortgage option that provides the opportunity for qualifying veterans to purchase a primary residence without putting any money down towards the sale price of the home.
While the VA Loan is designed specifically for those who served, there are a handful of requirements. In order to qualify for a VA Loan there are specific service conditions each borrower must meet.
- You have served 90 consecutive days of service during wartime or
- You have served 181 days of services during peacetime OR
- You have more than 6 years of service in the National Guard or Reserves OR
- You are the spouse of a service member who died in the line of duty or as a result of a service-related disability
Obtaining your Certificate of Eligibility
All recipients of a VA Loan must first obtain a Certificate of Eligibility(COE),a formal document that explains what VA entitlement you possess, through the Department of Veterans Affairs. Merchants Home Lending can assist you with obtaining your COE, usually within a matter of minutes. You do not need your Certificate of Eligibility in hand to start the loan process with Merchants Home Lending.
VA Loan applicants may also obtain their Certificate of Eligibility themselves by filling out a Certificate of Eligibility Request Form (VA Form 261880). The form can be downloaded through the Veterans Administrations portal and mailed directly to the VA.
VA Loan Income Requirements
Borrowers interested in the VA Loan aren’t required to reach any kind of income threshold to use their home loan benefits; however, borrowers are expected to have stable, reliable income that will cover monthly expenses including their new mortgage payment.
Additionally, the VA requires that borrowers maintain a certain amount of income left over each month after all major expenses are paid. The excess is meant to cover typical family needs, such as food, transportation and so forth and is referred to as residual income. Residual income is a large reason why the VA Loan maintains one of the lowest foreclosure rates of all major lending options.
By enforcing residual income requirements, the VA increases the chances of its borrowers earning sufficient income to meet all financial obligations, and also ensures borrowers have a cushion in the event of an emergency.