Yes, you can through a Certificate of Veteran Status. This is issued by VA and is used when applying for FHA loans.
It’s a given that VA loans work wonders for eligible Veterans and Servicemembers. But it’s interesting to note that Veterans found to be not eligible for VA loans can use this FHA Certificate of Veteran Status to possibly qualify for FHA loans at slightly better terms.
VA Loans and Eligibility
Chapter 2 of VA’s handbook states the importance of establishing a Veteran’s eligibility for a VA loan — his or her length and nature of military service.
This is shown through the Certificate of Eligibility (COE), the only proof of eligibility that VA requires. Aside from that, the Veteran has to meet income and credit requirements set by the VA loan program.
VA cautions that a lender should never close a loan unless it obtains the COE, also known as VA Form 26-1880. IRRRLs, however, don’t require any COE; if you have one, you can present it to the lender.
Veteran Status and FHA Loans
Pursuant to Section 203(b)(2) of the National Housing Act, a Veteran may obtain an FHA loan at slightly better terms than a non-veteran applicant.
FHA loans, as they stand per the law, have the following perks:
- Smaller down payments. They can go as low as 3.5% of the purchase price.
- Limited fees. There are limits on fees a lender can impose in making an FHA loan.
- Wider demographics. With a mandate to promote homeownership, any person including Veterans can apply for an FHA loan.
Needless to say, FHA loans and VA loans are two separate programs. Still, VA is required to compute the relevant entitlement for the Veteran applying for an FHA loan under Sec. 203(b)(2).
VA will then issue VA Form 26-8261 or Certificate of Veteran Status to eligible Veterans applying for an FHA loan.
The Certificate of Veteran Status can also be issued to Veterans who are found to be not eligible for VA loans. VA will issue this certificate along with a notice of being denied eligibility for the VA program.
Getting FHA Certificate of Veteran Status
Your lender can assist in filing a request for FHA Certificate of Veteran Status with the VA Eligibility Center. You need to complete the form and attach necessary documents such as proof of military service.
Getting “Veteran Status” means meeting the length of service requirements similar to that of the COE whereby you must establish any of the following:
(i) active duty in the Armed Forces, (ii) active duty for training in the Reserve unit of the
Armed Forces, or (iii) active duty/active duty for training in the National Guard or Air National Guard.
Here’s an important reminder. While the COE can be issued to a Veteran while on active duty, the Certificate of Veteran Status can’t be issued while one is on active duty and has had no break in service.
This article shows that being ineligible for a VA loan might lead you to an FHA loan. Both are insured by the government and are competitively priced. Check your eligibility by speaking with a lender.