VA Loans & What You Need to Know

Good news for Veterans! If you have served your country, you can get a loan backed by the U.S. Department of Veterans Affairs without a down payment!

As the days of the financial crisis become more distant in the past mortgage options are becoming more flexible. A good option that is often unnoticed is the VA loan.

VA Loans Feature

To everyone’s surprise these loans aren’t made by the VA. The mortgage lenders make them and the VA backs them, giving lenders more flexibility.

The features of VA loans include:

-          100% financing of the home, with a loan limit of up to $417,000; also with the possibility of going up to $1,000,000 in high-cost areas. The VA website has loan limits for your area.

-          Possible financing of your closing costs, which include appraisals, credit report, title insurance, lender origination fee, recording fees, and even survey fees. In your average closing, these are the major expenses.

-          The ability to finance a one-time VA funding fee that is mandatory for all VA loans, and the possibility to have this fee waived if the buyer has an injury or disability.

-          Mortgage insurance? Nope! This can save a buyer hundreds of dollars a month.

-          No penalty if you pay off the loan early.

-          Loans for a primary residence only.

-          A plethora of options for fixed- or adjustable-rate mortgage loan programs.

Who is eligible for VA loans?

In order to receive a VA loan you must work with a specialist so they know exactly how you qualify. To qualify you must be one of the following:

-          Veteran.

-          Active duty service member.

-          Current or past National Guard or Reserve member who served active duty.

-          Current national Guard or Reserve member who has never been activated for federal active service.

-          Discharged member of the National Guard or Selected Reserve who has never been activated for federal active service.

-          Surviving spouse receiving Dependency & Indemnity Compensation benefits, or surviving spouse not receiving said benefits.

If you happen to be a single one of these, you may search for a VA loan specialist to find yourself a loan.

When you find one you will need to provide proof that you’re eligible for the loan; this is called a Certificate of Eligibility (COE). There are different requirements for each COE category.

A VA lender expert will help you find the correct corresponding CEO based on your service.

Approval process

Getting a VA loan approved is much like getting your everyday mortgage approval. The lender calculates what info you supply them (housing costs and debts). Hopefully they will find your monthly expenses don’t exceed more than 43% of your monthly income. However, sometimes it is acceptable to bump that number of to 50%.

Next they look at your credit score. Different lenders have different credit score requirements, but the typical minimum score is 620.

If it is a condo you are after, the VA has to approve the condo project. The VA has a list of preapproved condo complexes, so if the condo you want isn’t on the list, it may take a bit of extra work to get them to approve it.

If this is the case, time will not be on your side, as it may take a while. To help yourself, do your homework before writing an offer. Tell your agent you are getting a VA loan too!

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