Did you know that it’s a myth that you have to wait until you are not actively serving in the military to use your VA benefit? As long as you have met your time requirement, you may be able to use your benefit.
This means you must serve at least 90 days during wartime and 181 days during peacetime. Once you reach that requirement, you can apply for your Certificate of Entitlement. The COE is what you need for a lender to see if you qualify for a VA loan.
The Largest Obstacle
The largest obstacle many military members face when securing their VA loan while still actively serving in the military is the occupancy requirements. Generally, the VA requires that you occupy the home within 60 days of closing. If you are still deployed, this may not be a possibility.
In order to get around this requirement, though, you can have your spouse satisfy the owner occupancy requirement for you. As long as one of you is living in the home full-time, it satisfies the owner occupancy requirement.
If you are not married and cannot occupy the home within 60 days, you will have to petition the VA for an extension. Generally, the longest they will grant such an exception is 12 months after the closing date.
Qualifying for the VA Loan While in the Service
Even though you are still in the service, you still have to prove you qualify for the VA loan. This means that you can afford it and that your debt ratio is not too high for the program. Most notably, the VA will require proof of adequate disposable income each month in order to qualify.
Since you are still serving in the military, you will need to use your Leaves and Earnings Statement as proof of your income. If your duty is over within less than 12 months, though, you will also have to have other employment lined up in order to qualify for the loan. This would include a letter or contract from your future employer proving your employment and future income. If, however, you will not leave the military within 12 months, you can use your military income to qualify for the loan.
Aside from your standard pay, you may use your special allowances to qualify for the loan. This may include housing allowance, hazard, or combat pay to name a few examples.
Just as the lender would do if you had a standard job, they will make sure your income adequately covers the proposed mortgage payment as well as your other debts. As we stated above, the VA focuses on your disposable income. This means the money you have left after you pay your bills. They want to make sure you have enough money for daily living and will not have to sacrifice as a result of buying the new home.
The bottom line is that the VA looks for consistency and stability when qualifying you for your home loan. If you are on active duty in the military, you may still qualify as long as your income is set to continue for at least 12 months. The lender just needs to make sure that someone will occupy the property (you or your spouse) and that your income will continue for the near future.