Loan requirements


To be eligible for any VA loan, you must be either employed or receive a qualified source of income. Retirement, Social Security and Disability can all be qualified income.

 Credit scores

Although the VA does not require a certain credit score to qualify, most lenders will. This is a lender overlay as previously discussed in *How is the VA involved with the loan*. In many cases, 620 is the minimum score to qualify. Higher scores may be needed depending on the specific situation.  The score used is the middle score of the three main bureaus. If two people are listed on the loan, it is the lowest of the two middle scores.


On VA home purchase and VA cash out loans, an appraisal is always required. The appraisal is ordered directly through the VA where they appoint a licensed, approved appraiser in your area. The appraisal process through the VA is not the same as other types of financing because it can take a bit longer to complete, and generally they can’t be asked to rush. However, don’t let this deter you from choosing a VA loan. Find out more details from your lender before making a decision. You can still close a loan in the same time frame with VA as you can with other types of financing.

On VA streamline refinances, the VA does not require an appraisal, however, many lenders do as an overlay. See *How is the VA involved with loans*.  As the housing market crashed near 2008, lending guidelines began to tighten up. Lenders began requiring appraisals for certain VA streamline loans. This has continued through today’s times, and it is uncertain if this will change or loosen in the future. A lender’s determination whether an appraisal is required can be based on several factors, such as who your current lender is, where your property is located, if this is your primary home or an investment home. A lender may tell you if an appraisal is required or not.

Appraisals can range from a full report, a drive-by or an online automated value.   A full report is where the appraiser comes into home while a drive-by is where they drive past it to ensure the home is there with no major issues seen from outside.  An online, automated value is commonly used to determine the value. This option usually is at no cost to the borrower but may not provide the desired results in value.

Generally, when an appraisal is used, the new loan amount cannot exceed the value of the appraisal.  If the value comes in low, you may not be able to obtain a VA streamline loan.  When online automated values are used, many lenders have a cap such as 95% of that value that cant be exceeded. Some lenders, which is less common, can go up to 125% of the value when using the online automated value.