The Department of Veterans Affairs makes available a special mortgage loan for veterans and active servicemen via its VA Loan Guaranty program.
More commonly called the “VA loan”, the loan guaranty program allows for no money down on a home; and never requires its borrowers to pay mortgage insurance. Plus, VA mortgage rates rates are extra-low.
Since 1944, the VA loan program has been used in more than 20 million closings, offering affordable homeownership to military borrowers nationwide; and providing low-cost, streamlined refinance programs for existing VA homeowners.
VA LOANS: REQUIRED DOCUMENTS FOR A PURCHASE
The VA Loan Guaranty program is more lenient as compared to conventional loans via Fannie Mae and Freddie Mac; or to FHA loans insured by the Federal Housing Administration.
The VA loan allows for lower-than-typical credit scores, and income verifications are often less strict. However, because VA loans are part of the benefits bestowed upon military veterans and active servicepersons, there are two documents each military borrower is required to present at the time of closing.
These documents are either the DD-214 or the Statement of Service; and the Certificate of Eligibility (COE).
The DD-214 document details a person’s military service history and terms of separation. It’s required of all military borrowers who are no longer in active duty.
Veterans receive their DD-214 upon separation from the armed services.
If you’re a veterans of the U.S. Armed Services and unable to locate your individual DD-214, don’t worry. The federally-run National Personnel Records Center can issue a duplicate DD-214 upon request.
Or, if you prefer, your VA-approved lender can request your replacement DD-214 on your behalf.
VA loan eligibility never expires for veterans who have been honorably discharged.
Statement of Service
Active duty service members will not need to provide a DD-214, because that document is specific to veterans. Instead, they will need to provide evidence of their service which includes the start date of active duty plus a signature from a senior officer or assistant.
In general, the statement of service will address the a series of the following : Borrower’s full name, social security number, and date of birth; Branch of service and rank; Last discharge and type of discharge; and, for reservists, a note addressing whether you’re an active reservist or currently in inactive status.
A statement of service must be written on official letterhead.
Certificate of Eligibility
The Certificate of Eligibility (COE) is the third document required for a VA loan. It’s the home buyer’s evidence of VA loan eligibility and assures a mortgage lender that the borrower meets minimum VA loan standards.
There are two ways to get your VA Certificate of Eligibility. The first is to file Form 26-1880 with the VA and wait. The form asks for information such as your full name, your date of birth, and your social security number. The 26-1880 can be filed long-hand or electronically.
The second way to file for your COE is to ask your lender to do it on your behalf. VA-approved lenders can access a COE in as few as two minutes at no cost to you whatsoever. Also, your COE is portable and can be used by a different lender if you ultimately decide to work with someone else.
VA STREAMLINE REFINANCE: NO ADDITIONAL DOCS REQUIRED
All homeowners with a VA-backed loan get access to a special refinance program called the Interest Rate Reduction Refinance Loan (IRRRL). Often called the “VA Streamline Refinance”, the IRRRL is among the fastest, simplest refinance loans in today’s market.
According to the official VA Loan Guaranty guidelines, a VA streamline refinance requires none of the following, all of which are required with “traditional”, non-streamline refinance mortgages:
- No home appraisal
- No income verification
- No bank statements
- No credit score verification
- No employment verification
Furthermore, because VA homeownership would not be possible without having previously providing a DD-214 and COE, refinancing homeowners are not required to chase down additional evidence of eligibility.
All VA homeowners get access to the same low VA mortgage rates. There are no interest rate adjustments for doing a refinance as compared to a purchase.