Are you a surviving spouse of a veteran or service member? If you’re in the market for a new home or want to refinance your current one, you may wonder if you’re eligible for a VA loan.
In short, yes, but you’ll need to get a Certificate of Eligibility (COE) and meet the lender’s guidelines. Here’s what to know about VA loan spouse requirements in 2024, challenges you may face when applying for a mortgage and how to overcome them.
Overview of VA Loan Spouse Requirements in 2024
You could qualify for a VA loan as a spouse if you fit into one of these categories:
Surviving Spouses
If your spouse passed away while serving or from a service-related disability, you could be eligible for a VA loan. But in some instances, you’ll need to avoid remarrying to maintain your eligibility.
Active Duty and Veteran Spouses
In most instances, your spouse must be the primary borrower on the loan if they are active-duty service members or veterans. This means your eligibility for a VA loan hinges on your partners’ eligibility.
Spouses of POWs and MIAs
You could also be eligible for a VA loan if your spouse is a prisoner of war (POW) or missing in action (MIA). The VA will require you to meet certain conditions if you’re facing this tough situation.
The Benefits of VA Loans for Spouses
VA loans come with a host of benefits for qualifying spouses.
No Down Payment
The primary draw of VA loans is the ability to buy a home with no down payment. Traditional mortgages generally require 3 to 20 percent down, which can be a significant roadblock if you want to purchase sooner rather than later. But if you qualify for a VA loan as a spouse, you can skip this hurdle and keep more of your hard-earned money in your pocket with 100 percent financing.
Competitive Interest Rates
VA loans generally offer more attractive interest rates than conventional loans. A slightly reduced rate could mean more affordable monthly mortgage payments and sizable cost savings over the life of the loan.
No Private Mortgage Insurance (PMI)
Lenders generally require you to pay PMI if you put down less than 20%. It can add several hundred dollars to your monthly mortgage payments. But with a VA loan, you won’t pay PMI, which means lower monthly housing costs. And you could qualify for a larger mortgage amount.
Are there Any Specific Documentation Requirements for a VA Loan Spouse?
Before applying for a VA loan, gather the following documents to help streamline the lending process.
Proof of Relationship
You’ll need a copy of your marriage license to prove that you are currently married or were legally married to the service member (if deceased). For the latter, you’ll also need a death certificate that indicates that the cause of death was service-related.
Certificate of Eligibility (COE)
It demonstrates that you meet the eligibility criteria for a VA loan. You must complete and submit VA Form 26-1817 or VA Form 21P-534EZ (if you’re not receiving benefits) along with Form DD214 to retrieve a copy. Be sure to include your proof of relationship and any additional documentation the VA requests.
Income and Credit Considerations
When reviewing your application, the lender will also evaluate your income, creditworthiness and debt load to decide if you’re a good fit for a mortgage.
Joint Income Requirements
Lenders consider your and your spouse’s income if you apply jointly for a mortgage. More income could mean higher borrowing power, but you’ll first need proof of income, like pay stubs, tax returns and employment verification forms.
Remember, lenders want reassurance that you can afford to make timely mortgage payments, so they’ll do their due diligence to confirm that your income is both adequate and consistent.
Credit Score Evaluation
Credit scores are also another vital factor lenders consider when evaluating your mortgage application. If you apply with your spouse, the lender will use the lowest score between both parties to determine your eligibility and, if so, what interest rate you qualify for.
But if you’re eligible to apply on your own, your middle credit score is used to make a lending decision. Either way, most lenders require a credit score of 640 or higher to qualify, but some go down to 620 or lower, as the VA does not have a minimum credit score threshold.
Debt-to-Income Ratio (DTI)
Your DTI represents the percentage of your gross monthly income used to cover debt obligations. Ideally, this figure should not exceed 41 percent to have the best chance of qualifying for a VA loan. But you could get approved with a higher DTI if other compensating factors exist.
Common Challenges and How to Overcome Them
As with any mortgage product, you could face hurdles when trying to get approved and get to the closing table. Below are some common challenges VA borrowers face and actions you can take to overcome them.
Income Verification Issues
If you or your spouse have irregular or non-traditional income, it can be challenging for your lender to verify it. The same applies to self-employed borrowers, but you can prepare in advance by reaching out to the lender to get an idea of what documents they’ll need and gathering them before formally applying for a loan.
Credit Report Discrepancies
Roughly 1 in 5 credit reports contain errors, and yours may include inaccurate or dated information that’s dragging your score down. So, it’s vital to get copies of your credit reports from the three major credit bureaus – Experian, TransUnion and Equifax – to review the contents and file disputes promptly to correct errors (if needed). Doing so could give your credit score the boost required to qualify you for a VA loan with competitive terms.
Note: Visit AnnualCreditReport.com to get copies of your credit reports. They’re accessible weekly, free of charge.
Conclusion: Importance of Understanding VA Loan Spouse Requirements
It’s worth familiarizing yourself with VA loan spouse requirements to avoid any surprises when applying for a mortgage. Most importantly, be sure to consult with lenders you’re considering before starting the application process to gauge if you’re a good fit for a loan. Being proactive can also help you know what to expect.
Resources for Further Assistance
If you need help with VA loan spouse requirements, several resources can assist you. You can visit a local VA office to get the support you need. A representative can also discuss VA benefits and program guidelines with you. You can also contact a VA-approved lender to learn more about VA mortgage products and the lending process. They can also assist you with applying for a COE if you haven’t yet done so.
The VA also provides detailed guidance on this page if you’d prefer to use a digital resource to educate yourself before visiting a local office.
Frequently Asked Questions (FAQs) for VA Loan Spouse Requirements in 2024
Yes, but only if their spouse is a prisoner of war, missing in action or if they pass away in the line of service or from a service-related disability.
As a spouse, you can continue to use the VA loan benefits, but you must keep up with the monthly mortgage payments and adhere to any other loan conditions.
Yes, if they qualify for a loan assumption, but the non-military spouse must meet the lender’s eligibility requirements.
