VA Loans and Requirements 2022

6 min read

Written by Peter Khoury


Your guide to Veterans Affairs loans in the United States. Understand the requirements, benefits, and all the information buyers need to know about VA loans.

What’s a VA loan?

The Veterans Benefits Administration makes loans available to “Service members, Veterans, and eligible surviving spouses to become homeowners”. Veterans are those who have served in active or past military fields.

Main pillars of the VA home loan benefit

  • No down payment required (Note: Lenders may require down payments for some borrowers using the VA home loan guaranty, but VA does not require a down payment)
  • Competitively low-interest rates
  • Limited closing costs
  • No need for Private Mortgage Insurance (PMI)
  • The VA home loan is a lifetime benefit: you can use the guaranty multiple times

VA Loan Requirements 2022

Since VA mortgages are military loans, you might qualify if you’re a veteran or active-duty service member. But serving in the Armed Forces (or being a surviving spouse of a service member) isn’t an automatic approval.

To get a VA loan, you must meet one of the following military service requirements:

  • Served 90 consecutive days of active service during wartime
  • Served 181 days of active service during peacetime
  • Served more than six years with the National Guard or Reserves (or 90 days under Title 32 with at least 30 of those days being consecutive)
  • You’re the surviving spouse of a service member who died in the line of duty or from a service-related disability

If you meet the qualifications, you can obtain a Certificate of Eligibility (COE) before applying, which is proof of your eligibility for VA financing.

Your COE also provides information about your VA entitlement.

If you haven’t used your VA home loan benefit before, you have ‘full entitlement’ and should be able to borrow without any down payment.

You can request your Certificate of Eligibility through the Department of Veterans Affairs’ eBenefits portal or your lender can request access within minutes.

What is the difference between a VA loan and a regular loan?

The main difference between veteran loans and regular loans is that no-down-payment is required and PMI is not needed on these loans. The borrower must follow the requirements to qualify to access VA funds.

What is the difference between VA and FHA loans?

FHA loans are offered to those who have lower credit and down-payment then conventional (regular) loans. FHA is offered to everyone who is using it for their primary home usage, no military background eligibility is required. FHA has down payment needed of 3.5% and VA has no down payment needed.

What are the benefits of a VA home loan?

  • No Down Payment
  • No PMI
  • Very Low Fees
  • Lowest Rates compared to FHA and Conventional
  • Funding Fees could be waived if Veteran has 10% min. Disability

What are the negatives of a VA loan?

  • Funding fee is expensive
  • You are borrowing 100% of the value of the home
  • Real Estate Agents and sellers have a bad stigma about FHA and veteran loans and prefer someone with more down payment.

How much is VA funding fee?

VA Funding fee is a one-time fee paid to the Veteran Affairs for supporting your loan. Note, you can roll the funding fee into your loan balance so you don’t have to pay it upfront out of pocket.

  • Funding Fees can be waived if you meet the minimum disability of 10%.

2022 VA Funding Fee Chart

Down PaymentFirst-Time VA Loan UseSubsequent VA Loan Use
No Down Payment2.3%3.6%
5% or more1.65%1.65%
10% or more1.4%1.4%

Are VA loans harder to close?

Not really, VA loans in the industry are always granted a lax view, as the veteran has served our country and lenders will try and do whatever it takes to get them into a home. Real Estate Agents and home Sellers prefer someone who would put 20% down and have more financial backing which is a shame. We believe its a lack of knowledge which has left them worried about how they can qualify if they are not putting any money down.

VA Qualifications:

Credit Score:

The VA doesn’t set a minimum credit score requirement. This is different from a conventional loan or FHA loan, which require FICO scores of 620 and 580 respectively.

  • Most VA lenders want to see a credit score of at least 620. Some will go as low as 580.
  • Some lenders only allow one 30-day late payment within the past 12 months .
  • You’ll have to wait two years after a Chapter 7 discharge to qualify for a VA loan, or 12 months from the filing date of a Chapter 13 bankruptcy.
  • The waiting period after a foreclosure is two years.

Debt to Income Ratio (DTI):

Lenders will review your income and calculate your DTI to determine your maximum loan amount.

With a VA loan, you’re typically allowed a max DTI of 41%.

That means your existing debts (credit card payments, car loans, student loans, etc.), plus your new mortgage payment, shouldn’t take up more than 41% of your monthly pre-tax income.

This is income left over after paying major expenses like your mortgage payment, installment loans, estimated utility costs, support payments, and revolving accounts. Lenders use income records and information on your credit report to gauge your residual income.

Keep in mind, this isn’t a hard or fast rule. It’s possible to qualify with a higher DTI — but only if you have higher residual income.

Think of the residual income calculation as a real-world simulation on your living expenses. It is the VA’s best effort at ensuring you a stress-free homeownership experience.

VA Loan Limits:

According to the U.S. Department of Veterans Affairs, there’s no limit or cap on how much you’re able to borrow with a VA loan.

As long as you have full entitlement — meaning you’ve never used a VA loan before — you can borrow as much as the lender will allow with no down payment.

Keep in mind, the amount you can afford it still limited by your income, DTI, and credit.

Property Requirements;

  • Must be your Primary Home
  • You can use it to buy a multi-unit property and live in one while renting the others.