In the United States, serving your country comes with some well-deserved benefits designed to recognize and reward your commitment. The opportunity to buy a house with a Veterans Affairs (VA) home loan is one of the most significant perks. You can become a homeowner with no down payment, even if your credit score isn’t stellar.
However, you must still meet specific requirements to qualify for a VA loan, including providing your VA Certificate of Eligibility (COE). We’ll discuss what a VA COE is and how to obtain your certificate. That way, you can start house shopping and ultimately buy the home of your dreams.
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In this article:
What is a VA Certificate of Eligibility (COE)?
“A Certificate of Eligibility is issued by the Department of Veteran Affairs. It certifies a borrower’s eligibility to use their VA home loan benefits. It’s not the same as a loan approval, but it confirms the person meets the requirements to apply for a VA loan,” said Rebecca Richardson, a mortgage loan officer specializing in VA loans for Kind Lending, via email.
Richardson said the VA COE contains several pieces of information, including:
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The date of issue
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The veteran’s name and VA file number
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The entitlement code (which confirms eligibility status and if a VA funding fee is required)
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The amount of available entitlement
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If the veteran receives any disability benefits
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If the veteran has ever had a VA loan
“Generally, getting the COE earlier in the process is better than later. [However], lenders will need to obtain the veteran’s COE before they can securely close on a VA-backed mortgage,” said Chris Birk, vice president of mortgage insight and director of education at Veterans United Home Loans, via email.
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How does the VA loan entitlement work?
Your entitlement refers to the amount the VA will pay your lender if you default on your mortgage, explained Richardson. If you have full entitlement (more on that below), the VA will generally pay 25% of your home loan.
Home buyers may confuse their entitlement with how much they can borrow, but these are different amounts. With full entitlement, you can take out a VA mortgage for 100% of the purchase price (assuming you otherwise qualify for the loan). However, the VA still only guarantees one-quarter of the debt.
You have full entitlement if one of three situations apply to you:
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You’ve never used your VA home loan benefit.
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You’ve paid off your VA mortgage and sold the home.
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You’ve been through a foreclosure or short sale but still paid off your VA home loan.
If you don’t have full entitlement, you may have remaining entitlement. In that case, the VA will pledge to repay up to 25% of your county’s home loan limit, minus the entitlement amount you’ve already used.
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How do you get a COE?
There are several ways you can obtain your COE, said Birk. For instance, you can:
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Apply online through the VA’s eBenefits portal.
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Work with a lender who uses the VA’s Automated Certificate of Eligibility (ACE) system (which enables the lender to pull your COE on your behalf). For example, Veterans United, Rocket Mortgage, and Navy Federal mortgages use the ACE system.
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Mail an application to the U.S. Department of Veterans Affairs.
“If applying online or directly through a lender with access to the ACE system, veterans and service members can receive their COE within seconds. However, applying by mail may take four to six weeks, depending on the VA’s processing times,” said Birk.
No matter how you apply, having the necessary documentation on hand can expedite the process. Richardson said the paperwork required varies depending on your eligibility category.
Here’s a breakdown by category:
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Veterans: Form DD214.
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Active-duty personnel: Current statement of service.
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National Guard or Reserve members: Form DD214 or proof of serving a minimum period of active duty.
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Surviving spouses: Form DD214. If you are not receiving Dependency & Indemnity Compensation, you’ll need proof of relationship to the veteran through marriage license and death certificate and completed VA Form 21P-534EZ (Application for DIC, Death Pension, and/or Accrued Benefits). If you are receiving DIC, provide VA Form 26-1817.
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VA Certificate of Eligibility FAQs
Does a COE guarantee VA mortgage approval?
“While a COE confirms eligibility for VA loan benefits, it does not guarantee loan approval. Veterans still need to meet VA and lender guidelines related to credit, income, debts, and more. They must also make sure the property they’re purchasing is a safe, sound dwelling that passes a VA appraisal,” said Birk.
Do you need a COE to refinance a VA home loan?
It depends. If you initiate a VA streamline refinance, which can lower your mortgage interest rate, you won’t need to apply for a new COE. However, you will need an updated COE if you opt for a VA cash-out refinance, which results in more mortgage debt.
Does a COE ever expire?
Your COE doesn’t expire. However, it might be necessary to apply for a new COE in some cases. “You may need to apply for a new one if your eligibility status changes or if you’re applying for a new VA loan after using your entitlement on a previous loan,” said Richardson.
Why might my COE application get denied?
Your COE application could get denied for several reasons. Richardson said that a veteran may be ineligible for a COE “… because they didn’t meet the time in service requirements, there’s missing or incorrect information in their personnel file, or they have an unfavorable characterization of service.” A dishonorable discharge is a common example of an unfavorable characterization of service.
How long does it take to get a COE?
If you apply online through the VA portal or have your lender pull it for you, you can have your COE almost instantly. However, if you mail a paper application to the VA, you may have to wait several weeks to receive it.
This article was edited by Laura Grace Tarpley