Section 2.7

All About the Certificate of Eligibility

In our last article, we briefly mentioned the Certificate of Eligibility, which is also known as the COE.

However, because it's such an important part of the VA loan process, we felt that we needed to dive in a little deeper to more fully explain what a COE is, how to get yours, and why it's necessary for your VA loan.

What Is a Certificate of Eligibility?

A COE is a document created by the VA that lenders use to check your basic eligibility for a VA loan. It will contain a bunch of important information, including:

  • Your name
  • The last four digits of your Social Security number
  • The military branch you served in
  • Your funding fee status
  • An entitlement code
  • A list of any prior VA loans you've received
  • Your basic entitlement amount
  • If you have any additional entitlement available

With all of these details, a lender is able to determine whether or not your military service is eligible for a VA loan, what size of loan the VA is willing to guarantee for you, whether or not you will need to pay the funding fee as part of your closing costs, and, if you do need to pay, what percentage it will need to be.

That first point—determining your service eligibility—is the big reason why getting your COE is usually the first step in the VA loan process. If your military service isn't eligible, the VA won't guarantee your loan, and a lender won't be able to give one to you, no matter how financially qualified you are.

How to Read Your COE

In our list above, most of the things we mentioned are pretty straightforward and easy to understand.

Your name? Check!

Last four of your SSN? Check!

Service branch? Check!

But some of the info might be new to you—your entitlement code, for example, and your entitlement amounts.

So What *Is* Entitlement?

Though we briefly mentioned entitlement in the last section of this Education Portal, we want to dive in a little deeper, since it's such an important part of the COE.

As a quick summary, your entitlement is how much money the VA is willing to guarantee on your VA loan.

Typically, the VA's guarantee is 25% of your loan amount—if you've never used your VA benefits before. However, if you've used a VA loan before, you may not have full entitlement, which could affect how much the VA is willing to guarantee on a loan for you.

This calculation of partial entitlement can be a little tricky, so we won't go into it here, especially since it probably doesn't apply to you yet. However, if you're interested in learning more, definitely check out our video where we show you how to calculate remaining entitlement:

Even though using your VA loan benefits can leave you with partial entitlement, it's important that you know you CAN reuse the entitlement awarded to you. It never expires, and if you pay off the full balance of the loan or sell the home, you can have your full entitlement restored.

But, even without restoring your full entitlement, most veterans and servicemembers usually have enough partial entitlement to get a second VA loan.

It's important to note that your entitlement is split into two tiers: basic entitlement, which is always $36,000, and your secondary, or additional, entitlement. The Certificate of Eligibility only ever displays information about your basic entitlement.

It's up to lenders to determine your secondary entitlement, using the methods and formulas outlined by the VA.

Entitlement Codes

Now, if we go back to looking at and understanding your COE, you will see a section near the top right that says "Entitlement Codes," followed by a two digit number.

This two digit number can relate to details about your military service, especially as it relates to when you served, as related to the service eligibility periods we outlined in Section 2.6 of this education portal.

However, not all entitlement codes related to your service period. One of the codes, for example, is used for surviving spouses, while another is used to indicate the restoration of full entitlement.

We've outlined all 11 different code options in the table below, so you can know exactly what the code on YOUR Certificate of Eligibility means:

Entitlement Codes Used on the VA's Certificate of Eligibility

Entitlement Code Meaning
01 WWII service
02 Korean War service
03 Post-Korean War service
04 Vietnam War service
05 Entitlement restored
06 Surviving spouse
07 Spouse of POW/MIA
08 Post-WWII service
09 Post-Vietnam service
10 Persian Gulf War service
11 Selected reserves

How the Funding Fee Plays into Your COE

In addition to the sections about entitlement, you may also not understand the section of your COE that says "Funding Fee."

We'll be diving deeper into what this fee is and how it works in Section 2.9 of this guide, but basically the funding fee is a closing cost on most VA loans.

On your Certificate of Eligibility, one of three options will be displayed next to the funding fee heading: "EXEMPT," "NON EXEMPT," and "CONTACT RLC."

If you have an "EXEMPT" status, that tells your lender that you won't have to pay the funding fee as part of your closing costs on the loan. This usually occurs if you have a service-connected disability rating of at least 10%, though it may also apply to some surviving spouses.

If your status is "NON EXEMPT," then you will need to pay it.

And finally, if it says "CONTACT RLC," then more information will need to be provided before determining if you are exempt or not exempt.

Why Getting Your COE Matters

As we stated before, the COE is the first thing needed to get a VA loan.

According to the VA, "A COE is the only reliable Proof of Eligibility for the Lender." Basically, without it, you won't be able to get a VA loan.

To put it even more simply: no COE, no VA loan.

However, being eligible isn't the same as being qualified. Having a COE only guarantees that you have the right type of service. It does not guarantee that you will actually get a VA loan.

That's because lenders will still need to evaluate your financial qualifications, now that they've determined you have the right type and length of military service.

The COE is basically what gets you in the door. Once you're in, the rest is up to you (and your financial situation). You'll still have to prove to a lender you'll be able to afford the mortgage and repay the loan.

Since you're now probably wondering what your COE says about you, let's discuss how you can get a copy of it for yourself.

How to Get Your COE?

You have three ways to request a COE:

  1. Lenders can do it for you
  2. You can apply for it online
  3. You can mail an application

While these are all viable options, one of them is definitely MUCH faster and better than the others.

If you want to get your COE quickly, you should go with the first option and have your lender request it for you. They have access to a special online system that can return a copy of your COE in minutes.

If you try to do it yourself—even if you also request it digitally—it can take days or even weeks to hear back.

So it's actually easier and faster for your lender to do it. All you'll need to do is provide them proof of service. Most commonly, this tends to come in the form of your DD-214.

However, if you're still serving, you might need an original statement of service signed by one of your superiors, or if you served in the National Guard or Reserves, it may be your NGB Form 22 or NGB Form 23.

If you're not sure which form you should use, the lender should be able to help you figure it out—but only if they're familiar with the process and are a VA-approved lender.

While any lender can technically do a VA loan, only those with VA-approval will have the expertise and experience to help you easily request your COE. Non VA-approved lenders don't have access to the digital portal that can return your COE instantly, so you'll want to make sure you're working with one who does.

That being said, if there are unique circumstances around your military service, or if you are a surviving spouse of a deceased veteran, even VA-approved lenders may have difficulty requesting your COE.

However, these situations are rare, and most servicemembers will be able to get instant access by using a VA-approved lender.

Kick Off Your Homeownership Journey by Requesting Your COE Today

If you've been thinking about buying your first home, getting your COE is the first real step. Even if you're not quite ready yet to take the leap, you can get a headstart now.

That's because COEs never expire.

Once you have it in hand, you'll KNOW whether or not you're eligible for a VA loan. And then, whenever you're ready to use it, you'll have it all ready to go.

Here at Low VA Rates, we'd love to be the ones to help you with that. As a VA-approved lender, we've helped THOUSANDS of veterans and servicemembers get their COE. We'd love to help you, too.

And don't worry—there's never any obligation to work with us. But we hope you'll want to after seeing how quick, easy, and painless it is for us to get your COE. So give us a call today. We'll be waiting by the phone.