VA Loan: Flexibility for Those Who Have Served
Active-duty military, veterans and their spouses may pre-qualify for VA loan benefits, like lower interest rates, lower minimum credit requirements, and no down payments or mortgage insurance. These features make VA loans a popular option among first-time borrowers. They can also be used more than once.
A VA loan is backed by the government through the U.S. Department of Veterans Affairs, giving approved lenders insurance to cover risks associated with this loan’s more flexible requirements.
How to Get a VA Loan
Borrowers often start by requesting a quote for their interest rate or beginning an application with a lender. We’ll go over your credit report, work with you to get your VA Certificate of Eligibility (CoE), and we’ll talk about your finances and terms you likely pre-qualify for. Then we’ll figure out the potential value of the house you’re interested in purchasing with an appraisal.
Talk only gets us so far, so be prepared for paperwork. We will request documentation for the underwriting process to make sure the loan begins on a solid foundation.
We’re with you through each step, all the way to closing.
VA Loan Requirements
These are the common requirements often needed to pre-qualify for a VA purchase loan. If you have questions about these requirements, we’re here to help.
- A Certificate of Eligibility (CoE), which is used to show you are eligible for VA benefits.
- Credit score requirements vary. In most cases a credit score of 580 or higher qualifies. This may shift lower or higher based on other factors.
- In the underwriting phase, you’ll need documentation of consistent income with a Debt-to-Income ratio at or below 60%. This ratio shows how much of your monthly income goes to paying current debt.
- Along with income information you need to show proof of residual monthly income remaining after major debts and obligations are paid.
- That you’re able to pay the VA funding fee, which can be waived in certain circumstances.
- The house needs to be your primary residence, and it must meet the minimum property standards.
VA Loan FAQs
Financing a home is an important investment. It’s ok to have questions. We’ve compiled answers to the frequently asked ones, but don’t hesitate to ask more.
All three of these loan types offer flexible financing options. VA loans differ in that they’re insured by the U.S. Department of Veterans Affairs, so lenders don’t need you to meet the strict qualification requirements of a conventional loan. With the stricter qualifications of conventional loans also comes benefits for those with higher credit scores.
FHA loans are also backed by the government and provide options for those with lower credit scores, while offering competitive interest rates and down payment options. However VA loans provide additional benefits that make them one of the best financing programs, including no down payment, no mortgage insurance, low interest rates, and low minimum credit requirements.
Eligibility for VA loans is service-based and proven through a Certificate of Eligibility (CoE) from the U.S. Department of Veterans Affairs. The VA evaluates eligibility based on your service status, your years of service, and your service record.
You may meet eligibility requirements if you are:
• A current active-duty military service member,
• A military veteran, or
• The spouse of a service member, including a surviving spouse
Detailed guidelines are available on the VA’s website. A CoE isn’t required to apply for a VA loan but it will be needed for approval. We can help you apply for your CoE or you can apply for it directly.
The VA has set property requirements to ensure that each house being financed is a good investment for all involved.
The minimum property standards assess a home’s safety, security, and soundness to evaluate whether the house is safe, structurally sound, and sanitary.
A home inspection will be required for this assessment, which considers factors such as the property on which the home sits, the home itself, and any other structures built on the property.
The VA funding fee is a one-time cost that varies based on your situation, such as whether this is your first VA loan and the amount of your down payment. The fee typically ranges from 1.4-3.6% of your loan amount and can be paid upfront or rolled into your monthly mortgage payment. It ensures the program is financially sustainable for all eligible veterans.
The VA also allows for exceptions around paying the funding fee. This includes Purple Heart recipients, veterans with service-related disabilities, and surviving spouses of veterans in certain circumstances.
Along with the VA funding fee there are closing costs, which cover expenses such as loan origination fees, an appraisal, title insurance, etc.
The VA also allows that up to 4% of these costs can be covered by the person selling your new house. This may be an option if it helps everyone close the sale of the house.
As long as you meet the eligibility criteria, you are entitled to VA mortgage benefits. You can use your VA benefits for your first home and continue to use them for each home you purchase in the future, if you continue to pre-qualify. Sometimes this even applies to using one Certificate of Eligibility to pre-qualify for two VA loans at the same time.
Full eligibility is restored after a VA loan is paid off or sold.