What Do I Need To Secure A Va Loan
In order to qualify for a VA loan you’ll need to provide your lending institution with a COE, or Certificate of Eligibility. The process to obtain a COE involves obtaining proof of service and filling out the right paperwork for your military branch. You can apply online or print out a COE request from the VA website. If you have access to your eBenefits portal you can receive your COE confirmation in just a few minutes. If you print out your form and wait for a mail response, expect the Certificate of Eligibility to take between 4 and 6 weeks.
Your Va Home Loan Benefit The Latest Changes And Tips To Make The Most Of It
When Bryan Bergjans and his wife bought their first house in the early 2000s, he didnt use his VA home loan benefit, because he didnt know about it.
And no one involved in the purchase including his realtor, his builder or his lender suggested that he use the benefit. He even showed up to some meetings in uniform.
You dont know what you dont know, he said.
The VA home loan program, which is more than 75 years old, can be used, in general, to buy, build or refinance a home. Its available to nearly every service member and veteran. And it can save you tens of thousands of dollars.
Bergjans, a Navy reservist, is now senior vice president and national director of military lending for Caliber Home Loans, which does business in all 50 states. The company ranked 13th in volume of VA loans in fiscal 2019, with 7,795 loans.
When he looks back at his own experience buying a home, there werent any malicious reasons behind the fact that he wasnt offered the VA loan benefit, Bergjans said. It simply wasnt on their list of options. I had a straight lack of knowledge, no understanding.
But hes used his benefit since then. And that experience is part of the passion behind his effort to educate realtors. He speaks to thousands of realtors around the country every year, working to dispel some of their myths about VA loans.
Bigger benefit now
As a result, more veterans will be able to buy homes in high-cost areas.
The funding fee
The Vas Occupancy Rules
The occupancy requirements are fairly straightforward. As stated by the VA, the law requires a veteran obtaining a VA-guaranteed loan to certify that he or she intends to personally occupy the property as his or her home.
Basically, anyone getting the loan must live in the home, ruling out renting the property, using the building exclusively for work purposes or allowing friends or non-eligible family members to live there.
Also, occupancy must be met within reasonable time, which in most cases means 60 days. So, a home buyer must move into their new home within 60 days of the mortgage closing. They must also prove that the home is their primary place of residence.
These rules only apply for VA loans, though. For IRRRLs, the VA says that a homeowner must only prove that they have been living in the home. This makes occupancy for a VA refinance much less of an issue than for VA home loans.
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Can A Veterans Spouse Get A Va Loan
Surviving spouses of active military veterans can also apply for a VA home loan. Youll need to be an un-remarried spouse of a veteran who died while in service or from a service-connected disability. Theyll also want to make sure you can pay your mortgage and have enough income to pay your other bills.
Can You Transfer A Va Loan To Another Person
Are VA loans transferable? Yes, a VA home loan can be transferred to a veteran or non-veteran individual who wants to purchase a house through a process called VA loan assumption as long as the person assuming the loan meets the income and credit eligibility requirements set by the lending institution.
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Va Loan Eligibility Requirements For Active Duty Military
To qualify for the VA loan, active duty military members must meet certain minimum service requirements. But, most service members will meet this threshold shortly after beginning their first tours, as active troops must only complete 90 continuous days of service to qualify.
However, active service members also need to understand that VA loan eligibility does not equal VA loan approval. As outlined above, the VA guarantees loans it doesnt actually issue them. Individual lenders provide the loans, and active duty borrowers need to meet the loan requirements established by these lenders. This means that, in addition to VA loan eligibility, veterans need to have the income, credit scores, and other financial requirements necessary to qualify for a loan.
Simply put, just because the VA says you have VA loan eligibility does not mean that a lender will actually issue you one. But, if you understand the information in the next three sections, youll increase your chances of qualifying for a VA loan as an active duty service member.
Picking The Best Loan For Your Family
When looking at conventional loan products, its important to look at interest rates, mortgage insurance, down payment and eligibility requirements. Some loans are only for Active Duty personnel and veterans, while other loans can benefit family members as well.
Regardless of your current situation, always research all your options before picking the right mortgage loan to fit your unique needs. Whether youre currently serving or have served, from all of us at Navy Federal, we salute you!
1All Choice loans require a 1.00% origination fee. The origination fee may be waived for a 0.25% increase in the interest rate. All Choice loans are subject to a funding fee of 1.75% of the loan amount. This funding fee can be financed into the loan up to a maximum of 101.75% LTV, or the fee can be waived for a 0.375% increase in the interest rate. Purchase loans require no down payment. LTV restrictions apply to refinance loans. Note: to be eligible for Military Choice, at least one borrower must be Active Duty or a veteran.
2Product features subject to approval. Available for purchase loans only. Loans are subject to an additional funding fee, which may be financed up to the max loan amount.
This article is intended to provide general information and shouldn’t be considered legal, tax or financial advice. It’s always a good idea to consult a tax or financial advisor for specific information on how certain laws apply to your situation and about your individual financial situation.
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How Do I Apply For Va Loan
Applying for a VA loan begins with assembling some basic information about your service. If youre a veteran, that includes a copy of your discharge or separation papers, or DD214. You can apply online, which is faster than applying by mail using a Request for a Certificate of Eligibility .
In most cases, your lender will be a bank or mortgage company. The next steps are:
- The lender will request a VA appraisal to estimate the houses market value.
- Using the appraisal and information about your credit and income, the lender will decide whether to accept your loan application.
- If your application is accepted, the lender will help you select a title company to transfer ownership of the house.
While no one joins the military so they can get a better deal on a home loan, VA mortgages are one way the nation shows appreciation to those who were willing to put their lives on the lines in defense of the country.
In other words, youve earned it. Take advantage of it to make your civilian life as successful as possible.
Va Loans For Military And Veterans
If youre active-duty military, a veteran or an eligible family member of a military veteran, you may qualify for a Veterans Affairs loan, and one of Movements biggest perks waived lenders fees*. The VA Mortgage is a government-based product offering 100% financing of the reasonable value of the property, with less restrictive qualifying terms than conventional programs.
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Va Loan Property Requirements
VA requires whatever home you purchase with a VA-backed loan to be a primary residence. This means you cant use the loan to buy a vacation home or an investment property. However, home doesnt just mean single-family homes. It can also mean condo units, multi-unit houses , and manufactured housing.
The home will need to undergo an appraisal and inspection by a VA-approved contractor before closing. Jones says VA appraisals tend to be strict and similar to FHA appraisals. These are intended to review the buildings safety and stability.
What Is The Interest Rate On A Va Loan
Interest rates on VA loans can be fixed or adjustable.
- With an adjustable-rate mortgage, your interest rate is tied to a financial index or market interest rate, such as the Libor, and it can change periodically. If interest rates rise, your rate can go up and your monthly payments increase.
- With a fixed-rate mortgage, your interest rate and mortgage payment should stay the same for the life of the loan.
Interest rates on VA loans are typically lower than rates on conventional mortgages. But rates and fees vary among lenders, so be sure to shop around.
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What Are The Fees Associated With A Va Loan
Fees? Who said anything about fees? Sorry, but even veterans must deal with some up-front costs.
To keep the VA home loan system afloat, there is a one-time funding fee. It varies, depending on the down payment and type of veteran. For instance, a borrower getting his/her first VA loan and making no down payment would pay a 2.15% fee on the amount of loan. The fee is 1.25% if the borrower makes a down payment of 10% or more.
Reservists and National Guard members usually pay about one-quarter of a percentage point more than active-duty personnel.
If youre using the VA loan program for a second time and have no down payment, the fee is 3.3% of the total loan amount. The fee is waived for veterans who received disability compensation.
For Military Families Va Loans Are A Lifeline But With A Catch
The mortgages have helped millions of soldiers buy homes, but they carry a mostly unfair stigma that has kept many families out of todays competitive market.
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The search for affordable housing has long been an accepted part of the job for American soldiers and their families. And since the Covid-19 pandemic set the real estate market on fire, it has never been harder.
Americas military families move homes 10 times more frequently than civilians, often relocating every two or three years. That burden is somewhat eased by the Veterans Affairs loan, a privately-funded mortgage backed by the U.S. Department of Veterans Affairs that is best known for allowing veterans to purchase a home with no down payment. About 25 million soldiers have used the loan since 1944.
The loan comes with other benefits, too: competitive interest rates, no prepayment penalties, shorter waiting periods for approval following foreclosure or bankruptcy, and no requirement for private mortgage insurance.
But in the hottest housing market in decades, many military families are now finding the loan can be more albatross than asset.
We just couldnt get anybody to accept our offer, said Shawn OFarrell, who tried for more than 50 homes this summer before eventually closing on a three-bedroom, three-bath house in Appleton, Wis.
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Secure A Certificate Of Eligibility
Youll need this to be eligible for your VA loan. Youll need to provide proof of your military service based on your status.
Rocket Mortgage® can help you verify your eligibility and get your certificate. VA-approved lenders, like Rocket Mortgage®, can help you get your certificate quickly with proof of service.
Tell your lender you need your certificate of eligibility early in the process so they can help you get it.
Veteran Mortgage Relief With The Va Loan
The U.S. Department of VeteransAffairs, or VA, provides home retention assistance. The VA intervenes whena veteran is having trouble making home loan payments.
The VA works with loan servicersto offer options to the veteran other than foreclosure.
In fiscal year 2019, the VA madeover400,000 contact actions to reach borrowers andloan servicers. The intent was to work out a mutually agreeable repaymentoption for both parties.
More than 100,000 veteranhomeowners avoided foreclosure in 2019 alone thanks to this effort.
The initiative has saved thetaxpayer an estimated $2.6 billion. More importantly, vastnumbers of veterans got another chance at homeownership.
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Are There Any Other Va Loan Rules To Know
There are no rules or requirements out of the ordinary. However, a couple of things borrowers often have questions on typically revolve around credit and income.
The VA doesn’t require a specific credit score for Veterans and military members who want to use their VA loan benefit. But VA lenders typically will, and it varies by lender. That said, VA credit score requirements are often more lenient with the VA guarantee.
Similarly, lenders will compute debt-to-income ratios. This measure is a snapshot of a borrower’s monthly debts and payments compared to their gross monthly income. Despite the VA’s preference for borrowers to have a 41 percent DTI ratio or lower, lenders will often allow for higher DTI ratios. That, too, can be different depending on the lender.
Bottom Line: Is A Va Loan Right For You
A VA loan may be a good choice if you dont have perfect credit, or you want to buy a home without a down payment but dont want to pay mortgage insurance. Just be aware that you need proof of military service to be eligible and youll likely have to pay a funding fee that could add significant cost to your loan.
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S For Getting A Va Loan While Youre Deployed
Just because youve been deployed doesnt mean you have to put your home buying plans on hold. Here are the steps you can take to get a VA loan while youre deployed so you can purchase a new home:
Does Assuming A Mortgage Hurt Your Credit
Assuming a mortgage wont hurt your credit any more than when you apply for a new home loan. The lender may check your credit history to determine your creditworthiness and this may knock off a few points from your score. But with regular and timely payments and other good borrowing habits, you can easily improve your credit standing.
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Applying For A Va Loan Is Not Solely Dependent On The Vet
Little known fact: the process of applying for this government-backed mortgage program is not limited to just the person whos affiliated with the military. With married couples, the spouse can also do a lot of the legwork. In fact, many military spouses handle the entire transaction for their partner and family. This is especially helpful for service members and their families who dont want the fact that theyre away on active duty to slow down their search for the home of their dreams.
Other scenarios exist as well. Military spouses:
- may be co-borrowers, providing income that helps the family qualify for a larger loan amount
- may also be eligible as military service members or vets and have their own entitlement that increases the loan benefits
- may have VA loan eligibility in the wake of a loved ones passing
Qualifying For A Va Mortgage
VA loan eligibility vs. qualification
Being eligible for VA home loan benefits basedon your military status or affiliation doesnt necessarilymean youllqualify for a VA loan.
You still have to qualify for a VAmortgage based on your credit, debt, and income.
Minimum credit score for a VA loan
The VA has established no minimum credit score for a VA mortgage.
However, many VA mortgage lenders require minimum FICO scores of 620 or higher so apply with many lenders if your credit score might be an issue.
Even VA lenders that allow lower credit scores dont accept subprime credit.
VA underwriting guidelines state that applicants must have paid their obligations on time for at least the most recent 12 months to be considered satisfactory credit risks.
In addition, the VA usually requires a two-year waiting period following a Chapter 7 bankruptcy or foreclosure before it will insure a loan.
And borrowers in Chapter 13 must have made at least 12 on-time payments and secure the approval of the bankruptcy court.
VA loan debt-to-income ratios
The relationship of your debts and your income is called your debt-to-income ratio, or DTI.
VA underwriters divide your monthly debts by your gross income to come up with this figure.
- If your gross income is $4,000 per month
- And your total monthly debt is $1,500
- Then your DTI is 37.5%
A DTI over 41 percent means the lender has to apply additional formulas to see if you qualify under residual income guidelines.
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