For veterans, active-duty service members, and certain eligible spouses, the VA loan is a powerful resource for achieving homeownership. However, before you can take advantage of a VA loan, you’ll need to secure a Certificate of Eligibility (COE). This document is a crucial step in the VA loan process and confirms your eligibility to lenders. Here’s what you need to know about the COE, how it works, and how 1st United Mortgage can assist you every step of the way.
What Is a VA Loan Certificate of Eligibility (COE)?
The COE is an official document issued by the U.S. Department of Veterans Affairs (VA). It confirms that you meet the eligibility requirements for a VA loan and outlines key details, such as:
– Your entitlement amount – The portion of the loan the VA will guarantee.
– Funding fee exemption status – Whether or not you need to pay the VA funding fee.
– Prior VA loan usage – Information about any previous VA loans and how much entitlement you’ve used.
– Special conditions – Any restrictions or additional requirements tied to your eligibility.
The COE is vital because lenders rely on it to confirm your ability to use a VA loan, but it’s important to note that having a COE doesn’t guarantee loan approval. Your financial qualifications, such as credit score, income, and debt levels, will still be evaluated by your lender.
Who Is Eligible for a COE?
The VA provides Certificate of Eligibilities to:
– Veterans who served a minimum required period, based on their service dates and conditions.
– Active-duty service members who meet service length requirements.
– National Guard and Reserve members with sufficient service.
– Surviving spouses of veterans who died in service or from a service-connected disability.
Each group has specific criteria that must be met, so working with a knowledgeable mortgage professional like 1st United Mortgage can simplify the process.
How to Obtain Your COE
There are three primary ways to secure your COE:
- Through a lender: Most lenders, including 1st United Mortgage, can request your COE directly through the VA’s online system, often providing results within minutes.
- Online through the VA’s eBenefits portal: If you prefer, you can apply for your COE through the VA website.
- By mail: If online options aren’t available, you can complete a VA Form 26-1880 and submit it to the VA via mail.
Each method requires specific documentation, such as proof of service (e.g., DD Form 214 for veterans or a statement of service for active-duty members).
Understanding Your COE
Your COE contains several important sections that you should understand:
1. Entitlement Codes
These codes identify your eligibility based on your service period. They also help lenders determine whether you meet specific criteria for VA loan benefits.
2. Funding Fee Status
Most borrowers are required to pay a one-time VA funding fee, which helps sustain the loan program. However, veterans with a service-connected disability and eligible surviving spouses may qualify for a funding fee exemption.
3. Prior VA Loan Usage
This section outlines any VA loans you’ve previously taken and whether any entitlement is currently tied up. Knowing how much entitlement remains can help you determine your borrowing capacity for future loans.
4. Entitlement Amount
This is the dollar amount the VA guarantees on your loan, which reduces the risk for lenders and helps you secure favorable terms.
5. Special Conditions
The COE may include specific conditions, such as limitations on entitlement restoration or requirements for additional documentation.
Restoring Your VA Loan Entitlement
If you’ve used your VA loan benefits before, you may still be eligible for another VA loan by restoring your entitlement. There are two main types of restoration:
1. Full Entitlement Restoration
This occurs when you’ve sold the property tied to the original VA loan and repaid the loan in full.
2. One-Time Restoration
This option is available if you pay off the VA loan but retain ownership of the property. However, this type of restoration can only be used once.
If you plan to use your VA benefits multiple times, it’s essential to manage your entitlement carefully.
What the COE Doesn’t Do
While the COE is a critical step in securing a VA loan, it doesn’t guarantee:
– Loan approval: Your lender will still evaluate your credit history, income, and other financial factors.
– Exemption from closing costs: While VA loans eliminate certain fees, other closing costs may still apply.
– Unlimited borrowing power: Your COE specifies entitlement limits, but additional factors, like your income and debt, influence how much you can borrow.
Why Work with 1st United Mortgage?
Navigating the VA loan process, including obtaining and understanding your COE, can feel overwhelming. At 1st United Mortgage, we specialize in VA loans and are committed to helping our veterans and service members achieve homeownership. Here’s how we can help:
– Simplified COE Process: We’ll request your COE on your behalf and ensure all documentation is submitted correctly.
– Expert Guidance: Our team is well-versed in VA loan requirements and can help you maximize your benefits.
– Personalized Service: From prequalification to closing, we’re with you every step of the way.
Start Your Homebuying Journey Today
The VA loan is a well-deserved benefit for those who have served our country. The right guidance can help you achieve your dream of homeownership. Let 1st United Mortgage make the process seamless and stress-free.
Call us today at (931) 548-1985 or visit our website to get started. Your journey to homeownership begins here.