The Veteran Affairs (VA) housing loan is a mortgage program created to assist eligible veterans who have served the country, are in active duty or their surviving spouses in becoming homeowners. The VA Housing Loan Certificate of Eligibility (COE) is a very important document in the process of securing a VA home loan. The COE serves as proof that an applicant meets the basic eligibility requirements for a VA loan, thus opening the doors to a range of valuable benefits, including competitive interest rates, no down payment, and no private mortgage insurance (PMI).

It is important to note that the VA does not issue home loans directly. The department rather guarantees a portion of the loan provided by private lenders, reducing the lender’s risk. This guarantee reduces the risk for lenders thus enabling veterans and their families to access favorable loan terms and purchase homes with little to no down payment.

The benefits of VA home loans

  • No Down Payment: VA loans allow eligible borrowers to purchase a home without a down payment, making homeownership more attainable especially for first time buyers.
  • Competitive Interest Rates: VA loans typically offer lower interest rates compared to conventional mortgages, which can result in significant long-term savings.
  • No Private Mortgage Insurance (PMI): Unlike conventional loans, VA loans do not require PMI, saving borrowers’ money each month.
  • Flexible Credit Requirements: VA loans are more forgiving of lower credit scores compared to conventional loans, making them more accessible for a broader range of borrowers.
  • Closing Cost Assistance: The VA limits the amount a veteran can be charged for closing costs, and sellers are allowed to contribute to these costs, further reducing the financial burden on the borrower.

What Is the Certificate of Eligibility (COE)?

The Certificate of Eligibility (COE) is a document issued by the VA that certifies an applicant’s eligibility for a VA home loan. The document provides essential information about the applicants’ time in military service; it serves as proof that the individual meets the basic requirements to participate in the VA loan program. The COE is basically the first step toward securing a VA home loan, and will be required by lenders as a part of the loan application process.


Details contained in the Certificate of Eligibility

  1. Name of the eligible applicant.
  2. The individual’s entitlement amount, which represents the maximum loan amount the VA will guarantee.
  3. Any previous use of VA loan entitlement, if applicable.
  4. The remaining entitlement, which indicates how much VA loan benefit the applicant has left.

Understanding these details is essential, as they directly affect the borrower’s ability to secure a VA home loan.


The significance of the COE

  • Proof of Eligibility: The COE confirms that the borrower is eligible for a VA home loan, providing assurance to lenders that the applicant meets the VA’s criteria.
  • Simplified Loan Approval: Lenders require the COE to process a VA loan application, and having this document in hand can expedite the loan approval process.
  • Access to VA Loan Benefits: Without a COE, veterans and eligible individuals cannot access the numerous benefits associated with VA home loans, such as no down payment and favorable loan terms.
  • Determines Loan Guaranty: The COE indicates the VA’s guaranty for your loan, which is a percentage of the loan amount that the VA agrees to pay the lender in case of default.
  • Clarifies Funding Fee: The COE also indicates whether you are required to pay a funding fee and, if so, the specific amount based on your military category and down payment, if any.

Types of COE

There are three main types of Certificate of Eligibility, and the type an applicant receives depends on their eligibility status:

  1. Regular COE for Veterans: This COE is typically issued to veterans who have completed their service requirements. The length and type of service required may vary depending on the era of service.
  2. COE for Reservists and National Guard Members: This COE is issued to individuals who have served in the Selected Reserve or National Guard. It is typically granted after six years of service, although certain conditions may apply.
  3. COE for Surviving Spouses: Surviving spouses of service members who died as a result of military service or service-related disability are eligible for VA home loans. Their COE will confirm this eligibility.

How to Obtain a Certificate of Eligibility

  1. The quickest and most convenient way to obtain a COE is through the VA’s eBenefits Portal. Veterans and active-duty service members can create an eBenefits account and go through the application process online. The system will often provide an instant determination of eligibility.
  2. A second method of obtaining a COE is through a VA-Approved lender. Many VA-approved lenders have access to the VA’s automated system and can request a COE on behalf of applicants during the loan application process.
  3. Alternatively, applicants can submit a paper application, VA Form 26-1880, directly to the VA’s Eligibility Center. The address is provided on the form.
  4. In some cases, you may be able to obtain your COE by contacting the VA directly over the phone. This option is available to some applicants, primarily for specific circumstances or questions related to their eligibility.
Documents required during the Coe application process

When applying for a COE, applicants will need to provide certain documentation, including:

  1. Discharge or Separation Documents (DD-214): This document is vital for veterans and service members who have completed their active duty service. It provides critical information about your service, including the character of service and dates served.
  2. Active Duty Service Records: Current active-duty service members can provide current statement of service forms or other documentation issued by their branch of service.
  3. Proof of Service for Reservists and National Guard Members: This may include evidence of completed service in the Selected Reserve or documentation of active-duty service during specific periods.
  4. Marriage Certificates and Proof of Surviving Spouse Status: Surviving spouses applying for the COE should provide marriage certificates, death certificates, and other relevant documents to establish their eligibility.
After obtaining your COE, what next?

Once you have your Certificate of Eligibility, you can then move forward with the VA home loan application process which involves the following:

  • Getting a VA-Approved Lender: make proper research during this step and only choose a lender who is experienced with VA loans. They are best equipped to help you understand the loan options available and guide you through the application process.
  • Provide Required Documentation: Lenders will request additional documents, such as proof of income, credit history, and employment verification.
  • Loan Pre-Approval: The lender will pre-approve you for a specific loan amount based on your financial situation.
  • Begin your home search while paying attention to your budget and unique preferences, which is largely determined by the pre-approved loan amount.
  • Formal Loan Application: Submit a formal loan application to your chosen lender.
  • Loan Processing and approval: The lender will review your application, verify your financial information, and order a home appraisal. Upon approval, you’ll receive a commitment letter outlining the loan terms and conditions.
  • Closing: Sign the necessary documents and complete the purchase of your home.

Understanding the COE Codes for easy interpretation

  1. Entitlement Code: This code signifies your eligibility based on your military service and discharge status. For example, 01 represents veterans with full entitlement, while 10 indicates active-duty service members.
  2. Character of Service Code: This code details the character of your military service and helps determine your eligibility. An “Honorably Discharged” code (DD214, ELS, etc.) is generally required.
  3. Period of Service Code: This code outlines your eligibility based on specific service periods, such as wartime, peacetime, and Gulf War.
  4. Funding Fee Exemption Code: If you are exempt from paying the funding fee due to a service-connected disability, this code will indicate your exemption status.

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