The Most Common Questions About VA Loans
What Loan Can I Apply For From The VA To Purchase A House?
The U.S. Department of Veteran's Affairs doesn't offer VA loans but backs VA loans made by lenders. The VA establishes the guidelines for VA loan approval, and the lenders approve the loans. You can't get a VA loan, but you can obtain a VA-backed loan through a VA lender. You can find lenders who offer VA loans.
What Are The Advantages Of A VA loan?
Veterans who served in the U.S. Military or are currently serving can apply for VA loans to finance a home up to 100 percent.
What Are The Requirements To Live In The House I Buy With A VA Loan?
Yes. You must live in the home that you purchase with a VA loan. You can't use VA loans to buy second homes or investment properties.
Can I Repay A VA Loan Before It Is Due?
You can pay off your VA loan early and not incur any additional fees. There is no prepayment penalty for VA loans. It is possible to pay the loan off entirely or more aggressively than what the monthly payments usually require. Your monthly payment will not be affected if you pay off the loan more than usual.
What If I Have Trouble Repaying My VA Loan?
Talk to your lender immediately if you have experienced a life change such as a job loss, divorce, or other major life events that make paying your VA mortgage difficult.
You should consider selling your home to avoid foreclosure if your circumstances change permanently. However, the VA might be able to offer an alternative repayment plan if the hardship is temporary.
You can also talk to your lender by calling 877-827-3722, asking for counseling, or by contacting the VA regional loan center closest to you.
Can I Get A VA Loan To Buy A Condo Or A Single-Family Home?
You can apply for a VA loan to purchase a condo. First, however, the VA must approve your condo project. The agency has a list of approved condos. If the apartment you are interested in is not on the list, you will need to contact your lender to get it approved. This can take a lot of time, so do your research before you make an offer. Also, make sure that your agent knows you are applying for a VA loan.
Who Is Eligible To Receive A VA Loan?
The Following Are Eligible For VA Loans:
Veterans
Active duty service members
Active Federal active service members, current or former National Guard or Reserve personnel who were activated
Members of the National Guard or Reserve who are currently serving in federal active duty but have not been previously in National Guard or Reserve
Members of the National Guard discharged who have not been activated for federal service.
Members of the Selected Reserve were discharged but not started for federal service.
Spouses who survive in receipt of Dependency and Indemnity Compensation benefits (DIC)
Spouses of deceased spouses not receiving DIC benefits
Do You Have To Meet A Certain Service Requirement To Be Eligible For A VA Loan?
These Are The Requirements To Be Eligible For VA loans:
Served 181 days during peacetime (Active duty)
90-day active duty during wartime
Six years service in the Reserves and National Guard
Spouse of a deceased serviceman or service-connected disability
How Can I Prove My Military Service To Be Eligible For A VA Loan?
A Certificate Of Eligibility (COE) is required to obtain a VA loan.
What Is A Certificate Of Eligibility (COE), And How Can I Obtain It?
The type of service you have will determine the type of COE that you require. You can apply online via the VA benefits portal or by mail to obtain your COE.
Can My Lender Get My COE For Me?
Yes. Your lender can get your COE. All VA-approved lenders must include a COE as part of their loan underwriting process. A VA lender is the best way to obtain your COE. The VA provides a portal for lenders that allows them to obtain the COE in minutes.
How Can I Apply For A VA Loan?
The lender will require you to provide documentation about your assets, income, residence, credit, debt, and employment after submitting the initial application. To be able for your lender to give you accurate advice and approve you, you must promptly provide all information.
Can I Use A Co-Signer?
Co-signers, also known as co-borrowers due to their equal responsibilities for the loan, are permitted but only if they are a spouse or another veteran.
What Does My Credit Score Have To Do With My VA Loan Rate?
Your ability to qualify and the rate of your VA loan will be affected by your credit score. You will need to have a credit score of at least 620 to be eligible for a VA loan. Each lender will require a different credit score.
Rate and credit score have a direct relationship: the better your credit score, the lower the rate. You can get a quote from your lender based on credit scores. A quick search for VA Mortgage Rates can help you to estimate your rate.
What If I Have Had Bankruptcy?
Certain borrowers who have met the post-bankruptcy guidelines can get loans from the VA two years after filing bankruptcy. The VA does not make VA loans. Instead, VA-approved lenders make them. These lenders have the option to be more strict. In certain cases, borrowers may not need to wait for two years. For details, consult your lender based on your particular profile.
If I Have Had A VA Loan In The Past, Can I Still Get One?
A VA loan is not a one-time benefit. You can still get one even if you have one previously for your home. However, you can only use a VA loan for the purchase of your primary residence. Therefore, you cannot use VA loans to purchase multiple properties.
How Is My Income-Qualified After I Have Completed Active Duty?
VA estimates that your monthly housing costs plus any other monthly payments (car loans or student loans) cannot exceed 41 percent of your income. Your income cannot exceed 41%. You can discuss this with your lender if you have any questions.
Your current income will be used if you are salaried. For self-employed people, the average income for two years will be used. Your income will be evaluated using two years' worth of tax returns and W-2s, as well as your current paystubs.
How Is My Qualifying Income Calculated If I Am Still On Active Duty?
To prove income and ongoing service, you will need a Leave & Earnings Statement (LES) if you are on active duty.
You must document your income if your separation date falls less than 12 months from the closing of your loan:
Documentation proving re-enlistment, extension, or new ETS date beyond 12 months after loan closing.
A statement that you are reenlisting, along with a statement from the Commanding Officer confirming that you are eligible and that they believe you will be allowed to reenlist.
After being released from active duty, you will receive a letter from your private employer. Include start date, pay rate, and whether the employment is part-time or full-time.
What Fees Should I Expect To Pay For My VA Loan?
VA loan fees are the same as any other mortgage loan fees. Lender fees include origination, credit report, underwriting, processing, discount, underwriting, and processing. There are also settlement fees such as title insurance, escrow payment, and document preparation. There is also a VA funding fee, which is specific to VA loans. This is not an exhaustive list.
How Do I Calculate The VA Funding Fee?
The VA Funding Fee, a fee, a percentage of the loan amount assessed by the VA to each borrower to fund the VA Home Loan Program. These are the fees you pay for funding:
0 percent down payment: VA funding fee at 2.15 percent for regular military personnel and 2.4 percent for Reserve or National Guard personnel
5-10% down payment: VA funding fee 1.5 percent for regular military personnel, and 1.75 percent Reserve and National Guard personnel
10% down payment or more: VA funding fee of 1.25 % for regular military personnel and 1.5 % for Reserve and National Guard personnel
Can I Finance My VA Funding Fees?
Yes, you can finance the VA funding fee into your loan. For example, if regular military personnel purchased a $250,000 home with 100% financing, the funding fee would be 2.15 % or $5,375. You can add this amount to your $250,000 loan amount to save cash.
How Can I Keep Track Of Fees So I Know I Am Getting A Great Deal?
Federal law requires all lenders to inform you of these fees within three days of you applying. It would be best if you had the disclosures in a particular format to make them easy to understand and to be easily read. If you are shopping for lenders, all lenders will provide you with the same forms to help you compare.
The Good Faith Estimate or Truth In Lending forms will be used for initial disclosures prior to October 1, 2015.
The Loan Estimate will become the initial disclosure fee after October 1, 2015.
After you have submitted your loan application, you can request these disclosures by naming the person.
What Is A VA Appraisal?
The VA appraisal determines the value of your home and what you are willing to pay. The VA appraisal is also used to evaluate the property's condition, with a focus on the following:
Functional roof, heat, and plumbing.
Termites and other pests are not an issue.
No lead-based paint.
There is no water intrusion.
There are no safety or health concerns.
Who Orders The VA Appraisal?
The VA appraisal will be ordered by your lender for the property that you are under contract to purchase. The VA appraiser is not an employee of your lender, even though he or she orders it. Instead, he/she is independently licensed and VA-approved. This guarantees that the appraisal will not be biased.
What Happens If The Appraisal States That Repairs Are Required?
Before the loan can be closed, repairs that are required by the appraisal must be made. Negotiations between the buyer and seller should be made about who will pay for the repairs.
The buyer may cancel the contract if the seller refuses to pay for repairs or the buyer is not willing to take on the risk of making the necessary repairs. In such cases, the appraisal will not be refunded.
What Happens If The Appraised Value Is Less Than The Selling Price?
Lenders will approve loans based on appraisals that are lower than the sales price of the home.
If a borrower was under contract to purchase a home for $250,000 with 100-percent VA financing, and the appraisal came back at $225,000, they could still opt to buy the home at $250,000 but would need to bring in $25,000 more at closing. They can also negotiate with the seller to lower their price. The buyer can end the contract and search for a new home if the seller doesn't lower their price. The appraisal in such cases is non-refundable.
