A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required. A VA mortgage loan can be used towards purchasing a home, building a home, or refinancing an existing mortgage.
We will discuss what role the VA guarantee plays, the benefits of a VA mortgage loan, who is eligible for a VA loan, and the documentation you will need to present to your lender in order to apply.
Did you know that more than 27 million veterans and service personnel are eligible for VA financing, yet many aren’t aware it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement?
VA Does Not Offer Loans Directly and Does Not Guaranty You Will Qualify. The VA does not actually lend the money to you directly. They offer a guaranty to a lender that if you should default on the loan, they will pay the lender a percentage of the loan balance.
*The word GUARANTY does not actually guarantee the veteran will qualify for a VA home loan.
- 100% financing
- No monthly private mortgage insurance is required
- There is a limitation on buyers’ closing costs
- The loan is assumable, subject to VA mortgage loan approval of the assumer’s credit
- 30 year fixed loan
- Seller can pay up to 4% of the veterans closing costs and even pay down they buyer’s debt to help lower their debt-to-income ratio
- Interest rates are similar to FHA rates
- You don’t need perfect credit
Frequently Asked VA Mortgage Questions:
Q: My parent is a veteran. Can I obtain a VA mortgage loan if I have not served in the military myself?
No, the VA mortgage loan benefit does not extend to a veteran’s children.
Q: What is required to prove my record of military service?
You will be required to us Standard Form 180, Request Pertaining to Military Records, to apply for proof of military service.
Q: My spouse who has passed away was an eligible veteran. I am eligible for the home loan benefit myself?
A surviving spouse is eligible if they have not remarried, and the eligible veteran died during active duty service or as a result of a service-related disability.
Q: Is a VA loan better than a conventional mortgage?
In many cases, yes. Guaranteed VA home loans often offer a lower interest rate than conventional mortgages, they do not require monthly private mortgage insurance when borrowing more than 80% of a home’s value, and they can be easier to get approved for.
Q: How long does it take to get approved for a VA mortgage?
It varies depending on the current workload of your lender, but it is typically the same as for conventional mortgages – 3 weeks to 45 days.
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VA Mortgage Loan Requirements And Eligibility
Veterans with active duty service (who were not dishonorably discharged) during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31, 1955), and Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.
Veterans and active duty military personnel who served during peacetime must have had more than 180 days of active service. Veterans of enlisted service starting after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.
The VA does not require that you have a certain credit score in order for approval. The actual mortgage lenders, however, are allowed to set their own standards for VA loan requirements.
Changing economic conditions and increased losses due to loan defaults have motivated lenders to limit who they will lend to.
Since early 2010, most VA lenders in the U.S. have tightened their lending and credit score requirements, making home financing harder to come by for those with credit issues or other criteria that makes their loan more risky. As a result, getting a loan without a down payment is more difficult, though one of the few remaining options for 100% financing is a VA mortgage. Major lending groups have generally resolved to set the minimum credit score requirement at 620.
There are three specific pieces of documentation a lender will need to determine your VA eligibility:
- A DD214 for discharged veterans.
- A statement of service for active military personnel.
- A certificate of eligibility (COE) to determine you have VA entitlement.
Because each lender has different qualifying guidelines, the next step is to contact your lender to find out if you meet their VA requirements such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county’s maximum loan amount is.
Your VA mortgage lender can help you attain your certificate of eligibility on your behalf.
Lastly, if you have either had a divorce, filed bankruptcy, or had a previous home go into foreclosure, you are not immediately disqualified from a VA loan, although there are some additional restrictions.
To learn more: Check out our FREE Top 20 Homebuyer Secrets that can save you thousands of dollars! Plus browse our Home Buying Resources section and fill-out a free no-obligation secure online application or call us at 719.687.2112 with any questions.
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