How Your Military Discharge Can Affect VA Home Loan Eligibility

Documenting your proof of service is an essential step in the VA mortgage process.

As with most military benefits, the nature of your discharge can affect your eligibility for a VA home loan. While discharge type isn't an issue for most veterans, some individuals may need a more formal review before moving forward.

Acceptable Discharge Scenarios for VA Loans

Eligibility for the VA home loan benefit can depend on when you served, the nature of your service (Regular Military or Guard/Reserve), the reason for your separation and more.

Generally, you may be eligible for VA loan benefits if you've served:

• At least 90 consecutive days on active duty during wartime
• At least 181 consecutive days on active duty during peacetime
• Six years in the National Guard or Reserves

No matter if you were regular military or in the Guard or Reserves, a key component of eligibility will be the nature of your discharge.

Generally, three types of discharges may be automatically acceptable to the VA when it comes to evaluating home loan eligibility: Honorable (HON), Under Honorable Conditions (UHC) and General (GEN).

There are other discharge scenarios where veterans may be able to move forward right away with documenting their eligibility for a VA loan.

Generally, veterans who served at least 90 consecutive days are eligible if they were discharged for one of the following reasons:

• Discharged for hardship
• Early out
• Convenience of the government
• Reduction in force
• Condition interfered with duty
• Compensable service-connected disability

Veterans who served fewer than 90 days but were discharged for a service-connected disability can also be eligible for a VA loan.

Discharge Types Requiring Review

Two types of discharge will require an adjudication review: Other Than Honorable (OTH) and Bad Conduct.

In these situations, so much will depend on the veteran's unique circumstances. A veteran who deployed and/or fulfilled the term of their service may be better positioned than one who didn't.

It can take the VA several months to make an eligibility determination, which is something to factor into your potential homebuying timeline.

Dishonorable Discharge

Veteran status requires that service members are discharged or released from the military under conditions other than dishonorable.

A veteran with a dishonorable discharge will not be eligible to participate in the VA Loan Guaranty program.

Proof of Service

The most common way to prove military service is with the DD Form 214, the Certificate of Release or Discharge from Active Duty.

With this key documentation, the VA is usually able to determine whether you're eligible. Veterans of the Reserves and National Guard will typically supply an annual retirement points summary. Active military members will need to submit a statement of service.

Veterans and service members who meet eligibility guidelines will be issued a Certificate of Eligibility from the VA. While you don't need it in hand to start the homebuying process, lenders will need a copy of your COE before you can close on a VA loan.

Veterans can try to get their COE online using the VA's eBenefits portal. A mortgage lender may also be able to obtain it for you instantly through a special VA system.

Seeking Help

Remember that only the VA can determine whether you're eligible to utilize the VA loan program.

VA officials will review your military records, along with any supporting documentation you submit. They'll also consider things like your service history, performance and the nature of the infraction(s).

It's also important to remember that being eligible for a VA home loan and actually being able to obtain one represent two different things.

Veterans with VA loan entitlement will need to meet credit, financial and other requirements set by both the VA loan program and their specific lender.