The VA loan program is one of the most powerful mortgage benefits available to those who have served in the U.S. military. While many are aware of its benefits, there are several aspects of VA loans that might surprise you. Let’s dive into some lesser-known facts about VA loans.

1. No Maximum Loan Limit for 100% Financing

One of the most significant advantages of a VA loan is that there is no maximum loan limit for 100% financing. If you can find a lender willing to approve it, you could purchase a home for $20 million with no down payment. However, if you already have used some of your entitlement, the maximum the VA will guarantee is up to the conforming loan limit. The VA allows for a single high-priced home purchase, but they do not want borrowers using their benefits to build a real estate empire on their 25% guaranty.

2. No Minimum Credit Score Requirement (But Lenders Have Their Own)

While the VA does not impose a minimum credit score requirement, lenders typically do. Each lender sets their own credit score threshold, often ranging from 580 to 620 or higher. This means that while the VA itself is flexible, borrowers should check with different lenders to find the best approval terms.

3. Understanding the Certificate of Eligibility (COE) Codes

The Certificate of Eligibility (COE) is a key document that proves a borrower’s entitlement to a VA loan. Below are some COE codes and their meanings:

  • CODE 1 – Served in World War II
  • CODE 2 – Served in Korean War
  • CODE 3 – Served in Post-Korean War
  • CODE 4 – Served in Vietnam War
  • CODE 6 – Eligible Surviving Spouse
  • CODE 7 – Spouse of POW/MIA
  • CODE 8 – Served Post-Vietnam

4. Who Is Eligible for a VA Loan?

The VA loan is available to various categories of military members, veterans, and surviving spouses. Here’s a breakdown:

  • Active Military – Must have served at least 90 days of active duty.
  • Veterans – Eligibility depends on when you served. [Click here to find out more.]
  • National Guard – Must have 90 days of active duty OR six creditable years in the Selected Reserve with an honorable discharge, retirement, transfer to Standby Reserve, or continued service in the Selected Reserve.
  • Surviving Spouses – Eligible if they remain unmarried and their spouse:
    • Died on active duty
    • Died from a service-related injury
    • Was listed as MIA or POW for at least 90 days
    • Was totally disabled where the disability may not have been the cause of death
  • Surviving Spouses Who Remarried – Those who remarried after the age of 57 remain eligible.
  • Other Eligible Scenarios:
    • Discharged for hardship or convenience of the government (after at least 20 months of a 2-year enlistment)
    • Received an early-out after serving 21 months of a 2-year enlistment
    • Discharged due to reduction in force, medical conditions, or a service-connected disability

5. Unique Eligibility Cases

Some individuals qualify for a VA loan even if they weren’t part of the traditional U.S. military services. These include:

  • U.S. Citizens who served in the Armed Forces of a U.S.-Allied Government during World War II
  • Members of specific organizations:
    • Public Health Service Officers
    • Cadets at the U.S. Military, Air Force, or Coast Guard Academy
    • Midshipmen at the U.S. Naval Academy
    • Officers of the NOAA (National Oceanic and Atmospheric Administration)
    • Merchant Marines who served during World War II

Final Thoughts

VA loans offer a unique set of benefits and eligibility rules that many borrowers might not be fully aware of. Whether you’re looking to finance a multi-million dollar home or trying to determine if you’re eligible, it’s always best to consult a VA-approved lender who understands the ins and outs of the program.

If you or someone you know is considering a VA loan, be sure to explore all your options and take full advantage of this incredible benefit for our nation’s service members and veterans.

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