A VA loan is a veteran benefit for active duty military and/or discharged veterans and their families. A VA loan is a great loan in that it allows a veteran to do things that no other product will allow.
A VA loan will allow a veteran to purchase a home with no money down – 100% financing. A VA loan will allow a veteran to loan over 80% of the home value with no mortgage insurance. A VA loan will allow a veteran to complete a cash out refinance at up to 95% of the value of the home. There are a lot of things a VA loan does – and the interest rates are typically the same or better than a conforming loan.
WHO QUALIFIES FOR A VA LOAN:
Active duty military and veterans are eligible for the VA home loan benefit. Veterans are eligible that have completed their term of service, and were not dishonorably discharged, other than honorably discharged, or bad conduct discharged. Veterans must have served at least 90 days active duty during wartime or 181 days of service during peacetime.
Reservists must have served 6 years with an honorable discharge.
Unmarried surviving spouses of a military member who died during service or by the result of a disability caused by service are eligible.
WHAT REQUIREMENTS ARE NEEDED TO QUALIFY FOR A VA HOME LOAN
VA does not have very stringent credit requirements. You need a 620 mid FICO credit score to qualify with most lenders. Your past 12 months of payment history has to be relatively good. You can have some lates, but if all of your credit lines are late, there will most likely be a problem qualifying.
If you have had a recent Bankruptcy – you must wait 2 years from the discharge date on a Chapter 7, and 1 year from the discharge date on a Chapter 13. You must have made all payments on time during the Chapter 13 repay back period.
As far as income goes, you have to show that you can make the payment and still have money left over for normal expenses – food, gas, utilities, etc. VA will look at your past 2 years of income/employment/self employment so they can determine whether you make enough to qualify for the loan.
VA does require a funding fee to complete a new loan. Sometimes the lender can pay this for you based on the rate they offer you. Typically the lender does not pay for the funding fee, and VA allows you to finance it into the loan.
For first time use and for 100% financing purchase or construction loans – the required VA funding fee is 2.15%. If you can put up to 10% down, the VA funding fee drops to 1.5%. If you can put 10% or more down, the VA funding fee drops to 1.25%.
If you use the VA home loan benefit for a second time, the funding fee rises to 3.3%.
For Reserves / National Guard, the funding fee is a bit higher. For first time use and with 100% financing, the fee is 2.4%. If you put down up to 10% on the home, the fee drops to 1.75%. If you put 1o% or more down, the fees drops to 1.5%.
The fee for using a second VA home loan benefit for Reserves / National guard is 3.3%
Some borrowers are not required to pay a VA Funding fee. These include:
1.) Veterans who are being payed disability
2.) The spouse of a veteran who died in service or as the result of disabilities from service.
If you are currently in a VA loan, and would like to refinance (VA interest rate reduction loan), the VA funding fee is only .5% for regular homes, and 1% for manufactured homes.
Please contact me for a free VA mortgage quote and qualification. A VA loan is a great way to buy a primary residence home with no down payment at a great rate. VA loans are also great for refinancing for cash out or a lower rate!!
Mortgage Banker – Crossline Capital