A VA Certificate of Eligibility, or COE, is a form that confirms that a person has met the minimum military service requirements to apply for a VA home loan. The VA Certificate of Eligibility proves and specifies a person’s VA loan eligibility to a potential VA approved lender (such as a private mortgage company), by providing them with eligibility information. In doing so, it is composed of various sections, not all of which are straight-forward. 

How to Read a VA COE 

  • Personal Information 
  • Entitlement Codes
  • Funding Fee
  • Entitlement Amount
  • Conditions

The various components of a VA Certificate of Eligibility provide detailed information to the lender about the requirements and specifications of your VA loan eligibility. These components can be confusing, particularly when multiple conditions apply to the borrower’s entitlements. Being able to read and understand the various parts and pieces of your VA Certificate of Eligibility will help you to gain a full picture of your loan options and identify any limitations to your VA loan. By understanding what is stated on your VA COE, you will also be able to discuss the details of, and options for addressing, anything that may appear to limit your eligibility with your potential lender. 

What is a VA Certificate of Eligibility? 

The VA Certificate of Eligibility is essentially the first step in applying for a VA home loan. There are several ways to qualify a VA Certificate of Eligibility, such as active and inactive military service, as well as qualifications for the surviving spouses of veterans who died as a result of their active duty. An individual who wishes to apply for a VA home loan must first receive a Certificate of Eligibility, and present it to a potential lender. 

After receiving a VA COE, the borrower still needs to meet all of the VA loan requirements and standard loan requirements set out by the VA lender, regarding their income, current debt, and credit score, among others, to receive VA loan approval. Because these loans offer special VA loan benefits to the borrower (for example, no down payment, no mortgage insurance, and the potential for various waived fees), the lender needs to assess the Certificate of Eligibility to determine if the borrower qualifies for a VA home loan and the specific potential benefits for which they have qualified. 

The specifications surrounding the VA loan benefits apply differently depending on the borrower’s type and longevity of military service, as well as any previous history with other VA home loans. Being able to read and understand the components of your VA COE will help you to know if you qualify for VA disability benefits and what type of loan benefits for which you qualify.

How to Read a VA COE 

Personal Information

After receiving your COE, you will be able to look over the information it contains, and be able to better understand your potential home loan benefits. Personal information about you appears on the form, including your name, service number, Social Security number, and the military branch under which you served. This information is usually very direct and easily identifiable.

Entitlement Codes

The next item you may notice on your Certificate of Eligibility is an Entitlement Code. This is a number that confirms your military service, and particularly references an official era of service. The codes are numbered 1 through 11, and include the following references:

01 - World War II

02 - Korean War

03 - Post-Korean

04 - Vietnam War

05 - Entitlement Restored

06 - Surviving Spouse

07 - Spouse of POW/MIA

08 - Post World War II

09 - Post-Vietnam

10 - Gulf War

11 - Selected Reserves

The minimum service requirements to qualify for a VA home loan are different based on the era in which you served. Once you have seen your entitlement code, you can go to the U.S. Department of Veterans Affairs (VA) website, and look at the minimum requirements based on the era specified by your entitlement code.

Entitlement Code 05 (Entitlement Restored), refers specifically to those who have previously taken out a VA loan and repaid the loan. In other words, their loan has been restored. This code may specify greater funding fees or have other implications. Having had a previously restored VA loan may limit your options in taking out another one. In some circumstances, a borrower may fully restore their entitlement, while still in the possession of the property that was purchased with the first VA loan.

In other circumstances, the borrower may be required to dispose of (sell) any properties formerly purchased with a VA home loan before being eligible to take out a new VA home loan. Read each piece of your COE, and discuss your entitlement code with your lender.

Funding Fees

The next item found on the Certificate of Eligibility is the VA Funding Fee. The funding fee is a one-time closing cost fee that is paid to the VA (U.S. Department of Veterans Affairs). Monies received from the funding fees help pay for the VA home loan program (for example, paying for loans that have defaulted).

This field may display one of three possibilities: “exempt,” “non-exempt,” or “contact RLC.” If the field displays “exempt,” the borrower does not have to pay a funding fee. “Non-exempt” means that the borrower will need to pay a funding fee. If the field displays “contact RLC,” it means that the automatic system that generates COEs is not able to make the determination, and more information is necessary. In this case, a borrower should discuss this response with the lender. The lender will need to contact the U.S. Department of Veterans Affairs to provide additional information necessary to make the exemption determination.

Entitlement Amount 

The entitlement amount section is perhaps the most confusing section of a VA Certificate of Eligibility. The COE will list a “basic entitlement amount,” and will then state that most loans involve additional entitlement. The current “basic entitlement amount” for full entitlement is $36,000. That number is not the loan amount. It simply informs the lender that you have full entitlement and guarantees them that the VA will pay $36,000 (for loans under $144,000) or 25% (for loans over $144,000) in the case that you default on your loan. To understand your entitlement amount, you should look up the current VA home loan limit on the VA website. If you have full entitlement, your entitlement amount is 25% of the loan limit. 

Depending on your specific situation (for example, if you have a previous VA home loan that you fully paid off, or if you have a current VA home loan that has not been paid off or has not been restored), specific conditions may be applied to your entitlement for your VA loan, and these conditions can be found on your Certificate of Eligibility.

Conditions 

Some conditions may limit your entitlement or specify bonus entitlement, and will be explained in the middle of the form. Entitlement codes, funding fees, and entitlement amount, your specific situation, military service history, and VA loan history will determine whether you have additional conditions that apply to your VA loan eligibility. 

Listed conditions may also involve additional required steps and forms. Some common examples of situations that may apply conditions on your VA Certificate of Eligibility include:

  • Having a previous VA loan that has been paid off but you still own the property
  • Having a currently active VA loan that has not been fully paid off 
  • Having a foreclosure, short sale, or bank title transfer on a former VA loan that was not paid in full
  • Currently receiving service-related disability benefits or education benefits
  • A change in the borrower’s current status of active duty

Understanding the conditions listed on your COE will help to clarify your specific VA home loan eligibility and illuminate any additional steps to be taken. The lender should closely review all of the listed conditions and follow all of the necessary additional steps. The VA publishes informative pamphlets and circulars, and articles on their website, that specify the details of potential conditions.

How Do I apply for a VA Certificate of Eligibility? 

Applying for a VA Certificate of Eligibility is a relatively simple process. There are multiple ways to apply for your VA COE. You may apply online directly from the VA website by setting up an ebenefits account. You can also apply by mail. To do this, you should download the Request for a Certificate of Eligibility form (VA Form 26-1880), fill it out, and mail it to the address found on the form. The third and often easiest option is to apply through your VA approved lender. Provide your lender with the necessary information and documentation, and they will take care of the COE application for you.

Whichever method you choose to apply for your VA Certificate of Eligibility, you will need to have the following information and documentation ready and available:

  • Your personal information (your name, service number, Social Security number, and other personal details)

AND one of the following:

  • A copy of your discharge papers (for veterans and formerly activated National Guard or Reserve members)
  • A signed statement of service (for active-duty service members and current National Guard or Reserve members)
  • A Report of Separation, Record of Service, and Retirement Points Statement (for discharged National Guard members who were never activated)
  • A copy of annual retirement points and proof of honorable service (for discharged Reserve members who were never activated)
  • The veteran’s discharge documents and additional benefits documentation (for surviving spouses of veterans who died on active duty)

After gathering the necessary documentation, you can apply for your VA COE. If you have questions regarding what to include and where to attain the necessary information and documentation, consult with your lender or review the VA website, which provides a wealth of direct information on each step of the process.

Once you have applied for and received your VA Certificate of Eligibility, it is important to keep in mind that this is only the first step in applying for a VA loan. After obtaining your VA COE, you will need to apply for your loan through a VA approved lender, such as a private mortgage company that specifically works with VA loans. The mortgage lender will review the eligibility requirements and the information on your VA COE, check your credit score, and review your current debt, your income, and your loan history, in order to determine your approval for a loan.

VA Certificate of Eligibility

Reading and understanding your VA Certificate of Eligibility does not need to be an intimidating or daunting process. While pieces of the COE can be confusing and even appear discouraging, the guidance provided here should illuminate some of the more complex components and help to simplify the process. Resources such as your chosen mortgage lender or loan officer and the U.S. Department of Veterans Affairs website can provide additional support in applying for and understanding your VA Certificate of Eligibility.