Buying in Colorado With a VA Loan? How to Get Your Certificate of Eligibility and What It Doesn't Prove

A Certificate of Eligibility, or COE, confirms for your lender whether you qualify for the VA home loan benefit. Requesting one is what VA calls the first step in getting a VA-backed home loan. It doesn't mean a loan is approved, because the lender still reviews your application after that.

If you rent today, you can gather your service papers now, find out whether a lender can get the COE for you, and go in knowing what it does and doesn't show. These steps come from VA, so nothing here is a Colorado-only rule.

Who may be able to get a VA home loan COE

You may be able to get a COE if you meet the minimum active-duty service requirements for your service period or were discharged under a qualifying exception. VA spells out the details on its home loan eligibility page, and these are the main lines.

Service members and Veterans

• Service members: at least 90 continuous days, all at once, without a break in service.
• Veterans who served between August 2, 1990, and the present: at least 24 continuous months, or the full period (at least 90 days) for which you were called or ordered to active duty. At least 90 days can also count if you were discharged under a qualifying exception, and less than 90 days if you were discharged for a service-connected disability.
• Veterans from earlier periods: the minimum depends on when you served, and VA lists each period by date.

National Guard and Reserve members

• National Guard members: at least 90 days of non-training active-duty Title 10 service, or at least 90 days of active-duty service including at least 30 consecutive days, with a DD214 showing the activation listed in the next section. Six creditable years in the National Guard can also count if you continue to serve, were discharged honorably or were placed on the retired list.
• Reserve members: at least 90 days of non-training active-duty service. Six creditable years in the Selected Reserve can also count if you continue to serve, were discharged honorably or were placed on the retired list.

Surviving spouses and others

• Surviving spouses: you may be able to get a COE if you're eligible for or currently receiving certain types of VA Dependency and Indemnity Compensation (D.I.C.), or if you're the spouse of an active-duty service member who's missing in action or being held as a prisoner of war.

VA lists other situations too, including service in certain organizations.

If you don't meet the minimum

You may still be able to get a COE if you were discharged under a qualifying exception. Those exceptions include hardship, involuntary reduction in force, certain medical conditions and a service-connected disability, and VA's page has the full list. You can apply, and VA reviews your service records to determine whether you qualify.

If you received an other than honorable, bad conduct or dishonorable discharge, you may not be eligible for VA benefits. You can still apply and VA will review your service records. VA also names two ways to try to qualify: apply for a discharge upgrade, or ask for a VA Character of Discharge review.

Which papers to gather for your service status

The paperwork changes with your status, so find the line that matches you best. Here's what VA asks for.

Veterans and active-duty service members

• Veteran: a copy of your discharge or separation papers (DD214).
• Active-duty service member: a statement of service signed by your commander, adjutant or personnel officer. It shows your full name, Social Security number, date of birth, the date you entered duty, the duration of any lost time and the name of the command providing the information.

National Guard and Reserve members

• Current or former activated National Guard member: a copy of your DD214 or other discharge documents. With at least 90 days of active-duty service including at least 30 consecutive days, you'll need a copy of one of these that shows your activation date: your DD214 showing 32 USC sections 316, 502, 503, 504, or 505 activation, an annual point statement, or your DD220 with accompanying orders.
• Current or former activated Reserve member: a copy of your DD214 or other discharge documents.
• Current National Guard or Reserve member who has never been activated: a statement of service signed the same way, with the same details plus your total number of creditable years of service.
• Discharged National Guard member who was never activated: your Report of Separation and Record of Service (NGB Form 22) for each period of National Guard service, your Retirement Points Statement (NGB Form 23) and proof of the character of service.
• Discharged Reserve member who was never activated: a copy of your latest annual retirement points and proof of your honorable service.

Surviving spouses

• Surviving spouse: the Veteran's discharge documents (DD214), if available. If you receive D.I.C., you'll also fill out and send VA Form 26-1817. If you don't, you'll send a completed VA Form 21P-534EZ, a copy of your marriage license and the Veteran's death certificate.

A statement of service needs someone else's signature, so that's the paper to ask about early if it applies to you.

Three ways to request your COE

VA gives you three options, and the steps to request a COE are all on one page.

1. Online. Use the request link on VA's page.
2. Through your lender. Your lender may be able to use an online system called Web LGY to get your COE. Ask your lender about this option.
3. By mail. Fill out a Request for a Certificate of Eligibility (VA Form 26-1880) and mail it to the address on the last page of the form. Mail requests may take longer than the other two options.

After you request a COE, VA reviews your request and tells you its decision. You can check the status of your request online. Ask your lender when they'd like to have it.

What a COE doesn't prove

A COE speaks to your VA benefit. It isn't a loan approval. To get financing for a VA-backed home loan, you must meet credit, income and occupancy requirements from both VA and your lender. In VA's words, requesting a COE is "only part of the process."

Your next steps depend on the type of loan and the lender. VA describes them this way:

• The lender requests a VA appraisal of the house. An appraisal estimates the house's market value at the time of inspection. It isn't a home inspection or a guaranty of value.
• The lender reviews the appraisal and your credit and income information. If they decide to accept your application, they'll work with you to select a title company or other entity to close on the house.

It also helps to know who decides what. For most loans, the lender is a private bank or mortgage company. For the Native American Direct Loan, VA is the lender. For the lender's side of getting ready, see how pre-approval works in Colorado.

Already used your VA benefit once?

You may be able to restore an entitlement you used in the past to buy another home if you continue to meet the eligibility requirements and at least one of these is true:

• You've sold the home you bought with the prior loan and have paid that loan in full.
• A qualified Veteran-transferee agrees to assume your loan and substitute their entitlement for the same amount of entitlement you used originally.
• You've repaid your prior loan in full but haven't sold the home, which you can only do once.

If none of those fit, you may still have remaining entitlement to buy another home.

Your next step

Find your line in the papers list and start gathering that document. Requesting a COE is only part of the process. The lender will review the appraisal and your credit and income information and decide whether to accept your application.

Then read more about VA loans in Colorado, or book a time with Diane to ask how a COE fits your plans.

You can also call Diane at 719-687-2112.

Diane also helps buyers in Arizona, Montana and Florida.

Diane Beaumont, Mortgage Loan Originator, NMLS #247026. Benchmark Mortgage, a dba of Ark-La-Tex Financial Services, LLC, NMLS #2143. Equal Housing Lender. Not a commitment to lend.