Are you a veteran or an active-duty member of the military looking to buy a home? If so, you might be interested in the VA home loan program. This program is designed to help veterans and their families become homeowners by providing affordable mortgage options.

But before you start shopping for homes or applying for loans, there’s an important document you need to be aware of: the VA Loan Certificate of Eligibility (COE). The COE is a crucial part of the VA home loan process. This confirms your eligibility for the program and provides vital information that lenders need to approve your loan.

Let me walk you through the different sections of the COE and explain what each one means.

Personal Information

The first section of the VA Certificate of Eligibility is the personal information section. This section includes your full name and the last four digits of your social security number.

Remember to review this section carefully to ensure that all your personal information is accurate. Any errors could delay the loan approval process, so catching them early is essential.

Reference Number

When you apply for a VA home loan, your application is assigned a reference number. This unique number tracks your application throughout the loan process, from initial submission to approval.

The reference number is a vital piece of information that you’ll want to keep track of throughout the process. This allows you to check on the status of your application and ensure that everything is progressing as it should be.

If you have any questions or concerns about your application, having your reference number handy will make it much easier for customer service representatives to quickly locate your file and provide you with the assistance you need.

Entitlement Code

The Entitlement Code is a special code that describes the veteran’s specific military service period, which determines your eligibility for the loan. The code is crucial because it helps us determine how much you can borrow based on your entitlement amount.

The information below shows you what each Entitlement Code means, and the specific period it refers to. This can help you better understand your eligibility for a VA home loan.

• 01: WWII veterans who served for 90 continuous days
• 02: Korean War veterans who served for 90 days during wartime
• 03: Veterans who served between the Korean and Vietnam Wars for 181 days
• 04: Vietnam War veterans who served for 90 days
• 05: Veterans who have had their full entitlement restored
• 06: Surviving military spouses who haven’t remarried
• 07: Spouses of POW or MIA veterans who served for at least 90 days
• 08: Peacetime veterans who served for 181 days between WWII and Korean War
• 09: Veterans who served for 181 days between Vietnam War and the Persian Gulf War
• 10: Persian Gulf War veterans who served for 90 days during armed conflict or 181 days during peacetime
• 11: Selected Reserves veterans who served for at least six years in the Active Reserve or National Guard.

In general, the entitlement code determines the level of guarantee the VA will provide for your loan. This guarantee can help you get a more favorable interest rate, avoid a down payment, and save money in the long run. So, it’s essential to pay attention to your entitlement code and understand what it signifies in the COE.

Branch of Service

The branch of service section in the VA loan Certificate of Eligibility is where you’ll find information about which branch of the military you served in. This includes the Army, Navy, Air Force, Coast Guard, National Guard, and Marine Corps. 

This will also include any additional information about your service that may be relevant to your eligibility for a VA home loan. It can benefit veterans who need clarification on whether they meet the eligibility requirements for a VA home loan based on their branch of service.

Funding Fee

The VA charges the funding fee, and is usually included in the overall cost of the loan. Essentially, this fee is designed to help offset the costs of the VA loan program, which is intended to make homeownership more accessible to veterans.

The VA funding fee can vary depending on several factors, such as the loan type, the loan amount, and whether or not you’ve used your VA loan benefits before. Additionally, the fee can be a one-time charge or spread out over the life of the loan.

Typically, the fee ranges from 1.4% to 3.6% of the loan amount. However, there are certain circumstances where the funding fee may be waived or reduced, such as for disabled veterans. 

VA Disability Status

As a veteran, your VA disability status can impact your eligibility for a VA home loan. The VA disability rating determines the severity of a service-connected disability or illness during your military time.

One of the main benefits for disabled veterans is a funding fee exemption. Usually, when obtaining a VA loan, a funding fee is charged, which is a percentage of the loan amount. However, suppose you have a VA disability rating of at least 10%. In that case, you may be exempt from paying the funding fee altogether.

Compensation Rates

For veterans with a disability rating of 10% to 20%:

• Monthly payment for a 10% disability rating is $165.92
• Monthly payment for a 20% disability rating is $327.99
• Having a dependent spouse, child, or parent does not increase the payment rate

For veterans with a disability rating of 30% to 100%:

• For veterans with a dependent spouse or parent but no children:
  • Monthly compensation rates for a disability rating between 30% to 60% range from $508.05 to $1,634.65
  • Monthly compensation rates for a disability rating between 70% to 100% range from $1,663.06 to $4,148.03
• For veterans with dependents, including children:
  • Monthly compensation rates for a disability rating between 30% to 60% range from $548.05 to $1,722.65
  • Monthly compensation rates for a disability rating between 70% to 100% range from $1,757.06 to $4,295.92

Remember that VA compensation rates can change over time based on cost-of-living adjustments. By law, the VA matches the percentage of cost-of-living adjustments made to Social Security benefits to ensure the purchasing power of benefits keeps up with inflation.

Prior Loans Charged To Entitlement

Under VA guidelines, a veteran’s entitlement for a new loan is based on the amount of their remaining entitlement. If a veteran has an existing VA loan, their remaining entitlement may be reduced. This affects their ability to obtain a new one. However, in some cases, a veteran can have more than one VA loan simultaneously.

Therefore, veterans need to understand how their existing loans may impact their eligibility for a new VA loan. If a veteran has an existing VA loan, they may need to satisfy specific requirements before obtaining a new loan. For example, they may need to sell or pay off their current home before getting a new VA loan.

The COE will include information on any VA loans a veteran has. This consists of the VA loan number, loan amount, loan date, entitlement charged, and current status. This information can be helpful for veterans as they navigate the process of obtaining a new VA home loan.

Issued By & When

One section of the COE that lenders pay close attention to is the “Issued By” and “Date” fields. These indicate who at the VA verified the veteran’s service eligibility and when the verification occurred.

The “Issued By” shows the name of the VA official who reviewed the veteran’s service records and verified their eligibility for a VA loan. This ensures that the veteran meets the VA’s strict eligibility requirements, which can help protect the lender from potential losses if the loan defaults.

The “Date” on the COE indicates when the VA official verified the veteran’s eligibility. This can help determine if the veteran has any recent changes to their eligibility status, like if they were discharged from the military or received a change in their disability rating from the VA.

While a VA Certificate of Eligibility is good indefinitely, mortgage lenders will want to see a copy that is twelve months or less old. A lender may even decide to request an updated copy even after you have provided one.

Conclusion

In general, obtaining a VA loan Certificate of Eligibility is an important step in securing a VA home loan. It provides essential information about the borrower’s military service and eligibility for the program, and the funding fee and entitlement amount. 

Working with an experienced loan officer who understands the VA loan process can significantly impact the home-buying experience, especially for veterans and military families.