Because of all the sacrifices they made in their service to their country, U.S. veterans deserve all the help they can get regarding getting help financing their homes.
With VA loans, they can get better terms/rates than they would with regular financing. One of the biggest benefits is: no down payment, no private mortgage insurance, competitive interest rates, and more.
And while the whole program and its benefits seem pretty straightforward, unfortunately, the approval process can be quite complex. This has to do with the fact that once you’re finished with the basics, there are other lesser-known requirements that have to be met, but many veterans aren’t aware of them.
Those ‘hidden’ requirements can cause delays and problems to your application for a VA loan if you aren’t prepared for them.
Property Standards Beyond the Buyer’s Control
An obstacle no one speaks about is that VA loans require the property itself to meet Minimum Property Requirements (MPRs).
This doesn’t apply to the value of the house. It applies to safety and livability.
This means:
- Structural integrity is non-negotiable, meaning that any serious roof/foundation/drainage issues will result in rejection.
- (In most states) You have to undergo testing for termites (and other pests).
- You need to have home access sorted.
- All mechanical systems (electricity, heating, sanitation, water) must be safe and properly installed.
- Space requirements must be met.
- Lead-based paint must be treated or removed.
- The whole property must be free of any health hazards and nuisances (e.g., waste, excessive noise, contamination, etc.).
What this means is that even if you’re qualified as a borrower, you’ll still have your house pass all the checks.
And to be frank, the majority of veterans don’t want to have their loans rejected because one box on the checklist failed.
Residual Income Is Key
Most mortgages focus on debt-to-income (DTI) ratios and credit scores; where VA loans differ is that they also take into account ‘residual income’. And this makes a huge difference.
| For loans of $79,999 (USD) and below, the VA-required residual income for a family of 4 is $888 in the Northeast, $868 in the Midwest/South, and $967 in the West. For loans of $80,000 and above, the residual income required is approx. 15.5% higher. – VA Lender’s Handbook; M26-7, Chapter 4, Credit Underwriting |
This is the money left over each month after taxes, housing expenses, and debts.
- The VA sets regional minimums by family size.
- This is not about affordability; this is a measure to ensure veterans’ finances are not too stretched.
- Residual income requirements can vary a lot between solo homebuyers and larger families.
This safeguard is unique to VA loans. Homebuyers who are familiar with conventional mortgages usually overlook this requirement, only to learn they don’t qualify even when they’ve attained other financial goals.
Credit History Still Matters
VA loans are not as credit-heavy as most conventional options, but don’t assume this means that credit doesn’t count.
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Aside from the score itself, history is also taken into account:
- Late payments on home or car loans.
- Recent bankruptcies or foreclosures will result in waiting periods before approval.
- Collections or current debts don’t necessarily disqualify you, but they will raise lenders’ concerns.
For veterans who have struggled financially after serving, improving credit before applying is the best option.Occupancy Requirements You Can’t Avoid
Finally, VA loans are for primary residences, not investment properties or second homes. Borrowers must certify they intend to occupy the property as their primary residence within a reasonable amount of time – typically 60 days.
- Deployments or job transfers may complicate this requirement.
- Spouses will sometimes meet the occupancy requirement instead of the service member.
- Improper representation of occupancy is loan fraud and is very serious.
How These Hidden Rules Affect Borrowers
Each of these requirements is there to protect veterans, but also to protect the lending system.
Those requirements can appear as surprising obstacles if you haven’t taken the time to learn them properly. The best you can do is invest the time in learning the whole process before starting the search for your new home.
If you’re left wondering and thinking, “How does a VA loan work?”, there are plenty of resources that explain that in full detail (e.g., what’s required, how to avoid costly mistakes, etc.).
By being proactive, you avoid surprises that could delay your move-in date.
Conclusion
VA loans offer really huge benefits for those who served their country, but that doesn’t mean that the approval is guaranteed. Knowing what requirements usually can make delays or ruin the whole process is the most important part.
Prepare your documentation and go through everything thoroughly before submitting, and have a plan B if anything goes wrong. In that way, you’ll minimize the risks of delays and other issues that can happen.
Article written by Glenna Hobbs, glennahobbs1@gmail.com