What Is A COE?
As an active-duty servicemember or veteran, you might have heard great things about VA home loans. However, one requirement you likely came across is the COE. So, what is a COE and why do you need it? This is more commonly known as a certificate of eligibility and refers to documentation proving that you are eligible for a VA loan. This is usually issued by the U.S. Department of Veterans Affairs.
Why Do You Need a Certificate of Eligibility?
Not everyone who serves or served in the military is eligible for a VA loan. Eligibility often varies by military branch and could require a few years of service. How someone breaks ties with the military can also disqualify him or her or make it more difficult to receive eligibility. For example, someone who receives a dishonorable discharge generally does not qualify for a VA loan.
Note that veterans and active-duty military persons are not the only persons who may become eligible for a loan. In some cases, surviving spouses of veterans who died while serving their country can become eligible. Sometimes, surviving spouses can also become eligible if the military spouse suffered disabilities in the military.
How Do You Apply for a Certificate of Eligibility?
The VA recommends three ways for military persons to apply for a certificate. The most common and convenient route involves applying online. The VA has an eBenefits platform that makes this easy. You need to create an account before submitting your application.
You can also ask your lender to confirm eligibility on your behalf using the WebLGY system. This is an authentication platform made accessible to lenders. To complete the certification process using this step, the lender requires your name and Social Security Number.
The final option is to print the VA Form 26-1880 PDF, fill it out and submit it. Be sure to mail the form to the address listed on it. Note that using this step might take some time. So, if you are in a rush to close, try the online mediums first.
Qualifying spouses generally need to complete several forms to confirm eligibility. The specific form might depend on whether that person receives Dependency Indemnity Compensation.
Does a Certificate of Eligibility Guarantee a VA Loan?
The certificate only confirms that the VA is willing to back a loan offered to you by a bank. Lenders still need to complete additional steps to determine financial eligibility. This part of the loan promise is identical to what all other borrowers go through. Lenders rely on several factors to determine whether they can extend you a loan and the size of that loan:
- Your monthly take-home pay
- Your monthly debt payments
- Your credit score and credit history
- Whether the specific property has HOA fees
- The financial information of a co-borrower or co-signer
Why Choose a VA Loan Over Other Options?
One of the main perks of choosing a VA loan is that you generally do not need to make a down payment. For most other types of loans, you require a down payment ranging from 3% to 20%. In addition to this, you do not need mortgage insurance. This further reduces your monthly cost.
The versatility of VA loans is also worth noting. Many people believe you can only use them to purchase a home, but here are some additional purposes:
- Refinancing an existing mortgage
- Build a new home from the ground up
- Improve an existing home
Why Choose National Home Loans?
We are one of the top brokers in the nation and work hard to ensure you get a loan that works for you. Request rates for our San Diego VA loans today.
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Sources:
1. https://www.vba.va.gov/pubs/forms/vba-26-1880-are.pdf
2. https://www.va.gov/housing-assistance/home-loans/how-to-apply/
3. https://www.ebenefits.va.gov/ebenefits/about/feature?feature=cert-of-eligibility-home-loan
4. https://www.benefits.va.gov/homeloans/documents/docs/lender_coe_tutorial.pdf
5. https://www.va.gov/housing-assistance/home-loans/surviving-spouse/
