The lender is responsible for processing and closing a loan for VA loan applicants, but before this is done, they need to determine the applicant’s eligibility. There are a number of qualifications the applicant must meet to be eligible for a VA loan. If the veteran meets the requirements, they will receive an entitlement. The entitlement is the amount a veteran may have available for a guaranty on a loan.
A lender should not, under any circumstance, close a loan if the veteran’s eligibility has not been established. The VA cannot guarantee a loan for ineligible veterans, thus closing a loan before eligibility is established can cause trouble for both the veteran and the lender.
A Certificate of Eligibility must be obtained before any loan is closed. The Certificate of Eligibility is the only accepted proof of eligibility for the VA unless the application involves an Interest Rate Reduction Refinancing Loan. This certificate tells the VA that the applicant has sufficient credit history and income to support the cost of the home they are trying to purchase.
Most Certificates of Eligibility are obtained through: http://www.ebenefits.va.gov/. On this page, you would just click Apply, and then Housing.
It is the lender’s job to fill out these online applications with information from the veteran. This online form can find out the veteran’s eligibility in a matter of seconds. In some cases, the lender may be required to submit an electronic application, which allows the lender to upload all supporting documents.
If the veteran or lender prefers, applications are still accepted by mail. Mailing in an application by mail requires the applicant to complete VA Form 26-1880 or a Request for a Certificate of Eligibility. Online applications are, of course, much quicker and preferable to the VA.
If the lender receives a case number for an Interest Rate Reduction Refinancing Loan (IRRRL), then a Certificate of Eligibility is not required. This is the only case in which a certificate would not be required.
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