First we would like to thank all of our veterans for their service to this country. Without you and all who have given their lives before you, we would not enjoy the freedoms that we have today.
Thankfully, there is a great mortgage program for our veterans whether you served in the Army, Navy, Airforce or Marines. A VA mortgage loan is essentially the best type of loan program that anyone can get. Below we will take you through the basics of the program so you have a general understanding. Then, just complete the simple contact form so that one of our qualified VA loan officers can get back to you to have a free no obligation discussion on your personal scenario.
Do any of these things interest you? No Down Payment and No Mortgage Insurance. If so, then keep reading.
What is a VA Loan?
The Veterans Administration helped to make special mortgages available for veterans who meet the guidelines referenced below. The VA is not the lender, but they just insure or guarantee the loans for the lenders who are willing to make these special loans available. In simple terms, the VA takes on the risk if the lenders are willing to lend money to the veterans.
VA Loan Pros and Cons
- 100% loan to vaue ratio – or zero down!
- No mortgage insurance – No PMI
- Lower interest rates
- Debt to Income ratio much higher than other loan products
- Lower closing costs
- Easier to qualify for
- VA Funding Fee is an added expense
- VA loans are only for primary residences, not second homes or investments
- Some sellers prefer not to accept offers from borrowers who are using VA funding. However, what they do not know will not hurt them.
VA Loan Credit Score Requirements
The VA itself does not have a minimum credit score requirement. However, many of the lenders impose a minimum usually set at about 620. Let us help connect you with a qualified VA Mortgage Lender and they can help to get you qualified. Your other alternative is to secure an FHA loan where your rates will still be low, but you will need to have a small down payment plus mortgage insurance.
VA Loan Eligibility and Requirements
VA Service Requirements
- You will need at least 90 consecutive days of active duty service
- You will need 181 days of active duty service during peace time
- At least 6 years of service in the reserves or national guard
- Service persons on active duty who have also served for 90 consecutive days of active service
- Members of the National Guard as well as Reservists
- Cadets or Midshipmen from the Military Academy, Air force Academy, Coast Guard Academy or US Naval Academy
- World War II Merchant Seamen
- US Public Health Service Officers
- National Oceanic and Atmospheric Administration Officers
* If you have been dishonorably discharged, then you are ineligible.
Why Is There a VA Funding Fee and What Is It?
The VA loans do not require mortgage insurance. However, to help fund the program they implemented a VA funding fee which is 2.15% of the loan. That amount can be rolled into the total loan balance so that you do not have to pay it out of pocket.
Attached is the FUNDING FEE CHART from the VA. Please read this carefully so that you understand exactly how much to expect in the VA funding fee.
VA Mortgage Loan Limits for 2018
In most areas of the United States, veterans can buy a home up to $424,100 with no money down. However, some high cost counties have been added with higher limits up to $636,150. Click to see the VA loan limits in your area.
For VA Jumbo loans, the veteran will have no down payment against the first $424,100 of the purchase price. However, they must pay 25% down for ever dollar over $424,100. As en example, if the purchase price was $524,100 ($100k more than $424,100), the down payment required would be $25,000.
VA Loan Income Requirements
We already mentioned that the DTI – Debt to Income requirements are much higher than other loans which is a good thing. Below we will outline what type of income qualifies.
Qualifying VA Loan Income Sources
- W-2 or salaried income
- Overtime and bonus dollars earned
- Self employed dollars earned
- LES stipulated military income
- Part time job or second job earnings
- Child support or alimony dollars earned
Non-Qualifying VA Loan Income Sources
- Any income that you cannot document or verify
- Income from rental properties
- Income from a co-borrower who will not also live in the home
- One time income or bonus payments that will not recur
- Unemployent income benefits received
- Gambling or lottery income.
VA Streamline Refinance Loans or IRRRL (Interest Rate Reduction Refinance Loan)
These are even better than a purchase VA loan. For refinances, you must currently have a VA loan. With a VA streamline refinance loan, you must first have had your current loan for at least 210 days. Then, there is no credit check or income verification. It is as simple as just getting a lower rate and lower payment.
Frequently Asked Questions (FAQ)
Is a VA loan better than a conventional loan? Yes, VA loans have lower rates, no down payment and no mortgage insurance. Very hard to beat.
Do you have to pay back a VA loan? yes, you absolutely do. This is not free money. Otherwise nobody would pay it back.
What does your credit score have to be to get a VA loan? In most instances, the minimum score will be 620. However, we may help you find a lender that will work with lower scores than that.
Do ALL lenders offer VA loans? No, not all of them. We have done the research for you. Just complete the short form by answering a few questions and a qualified VA loan officer will get back to you.
Are reservists eligible for a VA loan? Yes, reservists as well as those serving in the National Guard.
Can I get a VA loan to buy my vacation home? The VA requires that you use the home being financed as your primary residence.
Does the VA offer no income or no documentation loans? No they do not. These loans are flexible enough to qualify for
Does the VA offer home equity loans? No, and when you think about it…. if you bought a home with 0% down, how much equitty could be available for a home equity loan? Not unless you are inquiring years later.
Do I need to be in contract on a home before applying for a VA loan? Not, you can start the application process and get pre approved, then fill in the details on the actual home purchase later.
Do I need a statement of service? Yes, you will need that from your commanding officer to verify your service in the military.