The Certificate of Eligibility is an integral part of the VA mortgage process. In fact, a buyer can’t close on a VA loan until the lender has a COE in hand.
What is a COE?
So what’s a COE? It’s a certificate that states whether the veteran or service member has served long enough to become eligible for VA home loan benefits. In general, a service member will need to serve 90 consecutive days of active duty during wartime, 181 days during peacetime or 6 years in the National Guard or Reserves. But it’s not just service members that qualify. Surviving spouses can become eligible for VA loan benefits if their spouse dies in the line of duty or as a result of a service-connected disability.
Multiple Uses
The VA loan guarantee isn’t a one-time benefit; VA buyers can use it multiple times. For a buyer looking to use their benefit a second or third time the COE will state whether their full entitlement is restored or if some is still locked into another home purchase. This information is used by the lender to determine how much the buyer can qualify for without having to put money down.
Funding Fee
The COE also states whether the buyer is exempt from the VA funding fee. If a buyer has a service connected disability of 10 percent or greater, their funding fee is waived. In fiscal year 2013, 34 percent of VA buyers were funding fee exempt. The funding fee is a charge by the Department of Veterans Affairs used to keep the program going. The fee ranges from 2.15 to 3.3% of the loan amount on a first time purchase with no money down. So being exempt from the funding fee can save the VA buyer a significant amount of money.
Documentation
The buyer will have to provide a few documents to obtain their COE. The first will have to be submitted with every manual request, and it’s the VA form 26-1880, also known as the Request for Certificate of Eligibility. The remaining documentation will depend on the service member’s status:
· Currently serving (active, national guard or reserves): statement of service.
· Discharged from Reserves: points statement and proof of discharge (Reserves).
· Discharged from National Guard: NGB Form 22 (National Guard).
· Discharged from Active Duty: DD214, the certificate of release or discharge from active duty.
Obtaining a COE
A COE can be obtained various ways. Buyers can submit a request for COE as directed on the VA benefits website. Or their loan officer can request a copy through the Automated Certificate of Eligibility (ACE) portal, which only requires a few key pieces of information from the buyer (name, date of birth and social security number). Not every COE is available through ACE. If they’re unable to pull the COE automatically, they’ll have to submit the documentation outlined above.
If you have any questions about the Certificate of Eligibility or any other portions of the VA loan process, please don’t hesitate to email me: This email address is being protected from spambots. You need JavaScript enabled to view it..
