Veterans: Your Certificate of Eligibility May Tell Us More Than You Think

If you're a Veteran thinking about buying a home, you may have heard someone mention your Certificate of Eligibility, commonly called a COE.

But what exactly is it?

And why does it matter?

As a fellow Veteran and VA Loan Specialist, the COE is one of the first things I want to review when helping another Veteran explore buying or refinancing a home.

That's because your COE can tell us quite a bit about the VA Home Loan Benefit you've earned.

What Is a VA Certificate of Eligibility?

Your COE helps establish to a VA-approved lender that you meet the applicable military-service requirements for the VA Home Loan Benefit.

But that's not the only useful information it contains.

Depending on your circumstances, the COE can help us understand:

• Your VA home-loan eligibility
• Your available entitlement
• Previous entitlement that may already be in use
• Your VA funding-fee exemption status
• And, in certain cases, your monthly service-connected disability compensation

That last one surprises many Veterans.

Your VA Disability Income May Appear on Your COE

If you receive service-connected VA disability compensation, your monthly compensation amount may appear in the conditions section of an exempt COE.

That's important because VA guidance allows lenders to treat service-connected disability income shown on an exempt COE as verified income.

In plain English:

The information we need may already be available through VA.

That can potentially mean one less document for you to locate.

Your VA Disability Income May Help You Qualify

VA disability compensation can be particularly helpful when qualifying for a home loan.

It's recurring income that may be considered as part of your mortgage qualification when it meets applicable requirements.

There's another potential advantage.

VA disability compensation is generally not taxable.

Certain non-taxable income may receive favorable treatment when calculating qualifying income, subject to VA and lender requirements.

That can potentially increase the amount of qualifying income a lender is able to recognize when evaluating your debt-to-income ratio.

That does not automatically mean you'll qualify for a larger mortgage. Your lender still needs to consider your complete financial picture, including income, debts, credit, residual income and the proposed housing payment.

The goal isn't to determine the largest loan you can possibly obtain.

It's to determine a homeownership strategy that makes sense for you.

Recently Received a New Disability Rating?

This is important.

Tell your loan officer.

Suppose your COE reflects $2,000 per month in disability compensation, but you've recently received a new rating and now receive $2,500.

The information on the COE may not yet reflect that change.

That doesn't necessarily create a problem.

It simply means your lender may need more current documentation, such as your updated VA disability award information or other acceptable evidence of the current amount.

This is why I don't just read the COE.

I talk to the Veteran.

Recently Married or Added a Dependent?

Here's another conversation worth having.

If you've recently:

• Married
• Had a child
• Added an eligible dependent
• Experienced another qualifying change in dependent status

your VA disability compensation could potentially be affected.

Veterans with qualifying disability ratings may receive additional compensation for eligible dependents.

I'm a mortgage professional, not the person who determines your VA disability benefits. If your family circumstances have changed and you believe your VA benefits should be reviewed, consider contacting VA or an accredited Veteran Service Officer.

Don't leave an earned benefit unexplored simply because you didn't know to ask.

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What About the VA Funding Fee?

This is another reason your disability status matters when buying or refinancing with VA financing.

Many Veterans using a VA-backed mortgage pay a VA funding fee.

However, certain Veterans—including some receiving compensation for a service-connected disability—may be exempt from paying the funding fee.

Depending on the loan amount and circumstances, that exemption can represent meaningful savings.

Your COE can provide important information about your funding-fee exemption status.

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What If I've Already Used My VA Loan?

This is one of the biggest misconceptions I encounter.

Using your VA Home Loan Benefit once doesn't necessarily mean you're finished with it.

Depending on your circumstances, you may be able to use your VA benefit again.

You may even have circumstances where some entitlement is already tied to an existing VA loan while additional entitlement remains available for another purchase.

That's why I don't want a Veteran deciding:

“I already used my VA loan, so I can't use it again.”

Let me look at the COE and the numbers first.

You might have options you didn't realize were available.

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What If I Want to Refinance?

Your VA benefit isn't limited to purchasing a home.

Depending on your current mortgage and circumstances, VA-backed refinancing options may also be available.

For example, a Veteran who already has a VA-backed mortgage may be able to explore a VA Interest Rate Reduction Refinance Loan (IRRRL) when the applicable requirements and financial benefit are met.

A Veteran with another type of mortgage—such as conventional or FHA financing—may potentially have other VA refinance options available.

The important thing is not to assume.

Have someone who understands VA lending review your specific situation.

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You Don't Have to Become a VA Loan Expert

This may be the most important message I can give another Veteran.

You don't need to understand every VA guideline before calling me.

You don't need to know how to calculate entitlement.

You don't need to know whether you're funding-fee exempt.

You don't need to calculate residual income.

And you certainly don't need to decide on your own that you won't qualify.

That's my job.

Your first step can simply be a conversation.

We'll look at your goals, review your COE, determine where you stand, and build a plan from there.

Whether you're ready to buy today or you're six months away, understanding your benefit gives you options.

You earned the benefit.

Let's make sure you understand how to use it.

Who a Veteran works with matters.

🇺🇸 The More You Know, The More We Serve.

Nate Carver
Fellow Veteran | VA Loan Specialist
NMLS #2004738

972-832-5761

www.natecarver.com