If you are active-duty military, a veteran or a surviving military spouse, you may be eligible to get a VA home loan. The VA’s home loan program is … Read More
There are several benefits program under the VA loan program. First, there are loans to help eligible veterans or surviving spouses purchase a home. … Read More
To be eligible for a VA home loan, the veteran must meet certain requirements. To purchase or cash out refinance, the money must be used for a home in … Read More
Get Your VA Approved
If you are a Veteran looking to buy a house, you need to understand the VA Loan application process. You will need to get a Certificate of Eligibility (COE) from the VA to prove to the lender that you qualify for the loan. To get the Certificate, fill out a VA Form 26-1880. You submit the form along with proof of military service to the Winston-Salem Eligibility Center. Some lenders can get this Certificate for you, if there is adequate data in the VA records.
If you are discharged from active duty, get a copy of DD Form 214, Certificate of Release or Discharge from active duty. Include this with your VA Form 26-1880. If your discharge was after October 1, 1979, DD Form 214 copy 4 should be included.
Those who served in Selected Reserves or the National Guard need to show at least six years of service. For Army or Air Force National Guard, submit NGB Form 22 or NGB Form 23.
You can get your eligibility for a VA Home Loan restored if you have had a VA loan before and it is paid off and you are going to sell the first home. The unmarried spouses of a deceased veteran who died on active duty or as the result of active duty is eligible for the VA Home Loan. You need to contact the Winston-Salem Eligibility Center.
The next thing you need to do is consider how much you can afford to pay each month on a mortgage. It is best to guess too low than too high. This will keep you out of trouble down the road. Take a look at your credit report. If anything is incorrect, get it corrected before you apply for the mortgage.
It is reported that nine out of 10 VA Mortgages require no down payment. However, you will need money for the earnest deposit and appraisal fees. You will normally get these back when you close on your home.
Before going in to apply for the mortgage, understand that you will have to show some residual income each month. It is a very important aspect of getting the loan approved. Residual income is the money left over after you pay your mortgage and household expenses for other things, like food, gas, etc. If you don’t have enough residual income on your first go around, reduce your mortgage amount before you apply.
You cannot borrow extra money for upgrading your new home. You can only get the selling price or the appraised price, whichever is smaller. If you want to do upgrades, you will have to pay for them yourself. It is best not to go through job changes or make other large purchases during the mortgage application process.
Similar to other loan options, VA loans demand proof that you’re able to pay for the property you’re financing, which is determined by the ratio between your present month-to-month income and any existing debts. Creditors consider income from several sources for VA loans, but they all have to satisfy certain minimum requirements.
It’s generally preferred that these funds come from full-time jobs, which in loan lingo means jobs that have at least a 30-hour work week. If you work for yourself as a sole proprietor, your qualifying income level is determined by your last tax return and requires proof of at least two years of steady payments.
Part-time income qualifies only if you’ve been receiving it for at least two years and your lender believes it is likely to continue. Other eligible sources of income like interest earnings, dividends, disability payments or retirement pensions will require proof in the form of receipts for the past two years. These funds must be expected to continue (and preferably to rise) for a minimum of three more years.
Do VA Loans Have Income Limits?
No. There is no income cap that must be adhered to in order to qualify for a VA loan. Other federal home loan applications may set income limits to qualify, but not the VA. However, VA loans do have certain “residual income” requirements that applicants must be aware of.
What is Residual Income?
Residual income is simply how much money is left after all your mortgage payments, taxes, insurance fees, subscriptions, and recurring debts are subtracted from your gross monthly income.
Recurring debts include any minimum monthly expenses such as credit card fees, car payments, college loans, and spouse or child support. Basically any monthly debt that shows up in your credit history may be considered when calculating residual income requirements. Other costs for things like groceries, utilities, and recreational activities are not considered when determining the total amount of your residual income.
The specific requirements for residual income are variable and depend on things like how many people you live with, your mortgage rate, and the physical location of the home you are interested in. For instance, an individual loan applicant in the Southeastern US will typically need much less money to be left over in residuals every month than a large family living in Los Angeles or Beverly Hills. VA loan providers can provide you with a residual income formula graph if you want to make sure you meet all of their residual income requirements before meeting with them formally.
Unusable Income Sources
Some income sources can’t be used for obtaining a VA loan. A few of these non-qualifying sources include cash earned by gambling or playing the lotto, unemployment income and job bonuses. To be approved for a VA loan, you also have to account for any income earned by family members or roommates who live with you, while funds received from co-applicants who don’t live in your home do not qualify.
Veterans are special people in whatever society they live. They are people who have dedicated their lives at some point to defending their country and establishing peace in war-torn areas around the world. Veterans should get the attention they deserve once they retire from serving their country. VA Loans are those provided, by mortgage companies and other private lenders, to qualified veterans to help them buy homes to live in. The loans are guaranteed to ensure that the providers are safe in case of losses that may arise from failure to pay back. The guaranty acts as a replacement to down payments that the lender should get so as to give the borrower significant terms.
Before one can get a VA Home Loan, homebuyers are offered pre-purchase counseling to enlighten them on the process of buying a residence, how to manage their debts and the main people involved in the course of acquiring a home. Pre-purchase advice is not a requirement for one to become eligible for VA Home Loan although it is hugely recommended. The loans do not have a set credit limit because one can get four times the entitled amount for veterans without the need to make a down payment.
For a veteran to be eligible for the VA Home Loans, they need to have a certificate of eligibility (COE). The document can be acquired from the lender since most of them have contact with the COE system, which is an application that determines whether or not a person is qualified to receive VA benefits. To buy a home, the veteran is first required to choose a place he or she likes. They should ensure to find out the seller’s conditions and sign a contract of purchase. The veteran should then find an appropriate lender and apply for their loan.
A short sale can arise when a loan provider allows a person to sell their property for less than the amount they owe. Short sales come up in instances when lenders want to avoid wasting time and resources due to the lengthy process of foreclosure. Foreclosure can take up to three years depending on the state before it can pay off. A short sale can have many effects on the veteran’s loan eligibility. A customer with a big credit is capable of losing as much as 160 points in an event of a short sale. Loss of points may make the process of acquiring another loan tiring.
There are many benefits from VA Home Loans. They ensure that veterans have an equal opportunity to own homes. The interest rates are negotiable and a veteran is given information on the reasonable value of property. VA Home Loans ensure there are no premiums for mortgage insurance.
If you have never heard of the VA loan program, you should know that it is a mortgage loan approved by the U.S. Department of Veteran Affairs (VA). These loans are made by a qualified lender. The basic purpose of a VA loan is to provide residential facilities to qualifying veterans or their surviving spouse in areas where private financing was low. These areas include rural localities, small towns and places that are far from being called a metropolitan area. It helps vets buy a house without having to pay a down payment. The maximum amount of the loan without a down payment varies from area-to-area and time-to-time. It is an easy way through which veterans can enjoy residential amenities at a very low cost without having to pay extra funds like private mortgage insurance or a second mortgage. Here is a list of VA loan forms needed when applying for San Diego VA Loan.
Application for a VA Loan
In order to apply for a VA loan, you will need an application, originally a Form 1003 published by Fannie Mae and sometimes also referred to as Freddie Mac Form 65. Completing this application honestly and by avoiding any lies or false statements is imperative because to do otherwise might cause trouble for you in the future. In addition to tarnishing your name and your military career, a person who knowingly fills out the application with any kind of false statement may find their eligibility for a VA loan declined the next time they want to use it. They may also be subject to either a fine or imprisonment or both under the penal code of U.S. Code Section 1001.
In addition to the application, you also will need to provide additional paperwork. These include a number of forms that can help prove your eligibility and can help you qualify for the loan. Following is a list of paperwork that is required while applying for a VA loan:
- Copies of W2 statements for the past two years
W2 statements are required because they will let the authorities have a clear idea about your gross annual household income.
- Copies of your previous two pay stubs
In addition to the W2s, you also need to have copies of your latest two pay stubs as these also will give lenders an idea of whether or not you fall within the eligibility criteria.
- Documentation of other assets
Furthermore, you also need to submit documentation of all other financial assets like saving accounts, checking accounts, trust funds and financial investments etc. These documents also help determine whether you are eligible for the loan or not.
- In the case of self-employment, you are required to provide your tax returns for the past two years when applying for this loan.
- You will also need to submit your DD 214 or certificate of guarantee (COG) in order to qualify for this loan.
Thus, the VA loan has been designed to help veterans or their surviving spouse who actually need financial aid for housing facilities. As with all loan processes, a lot of paperwork is required but it’s all worth it on “move-in” day!
When you’re in the position of buying a house and appropriately tending your loans as well, the most vital part is to determine the best use of your money in order to reduce your debt and manage a mortgage plan at the same time. Simply put, you should look for a monthly payment which is low enough that you still have remaining funds which can used to decrease your debt amount or, if possible, add to your savings. In even simpler words, don’t bite off more than you can chew. Here are some mortgage payment tips to keep in mind when planning to buy a house.
Though, the best possible scenario for your financial planning would be to have minimal or zero debt and hold a larger mortgage payment – which means buying the house with less money down. This is because in most cases consumer debts have no tax benefits. Bigger mortgages mean bigger payments. But when you consider the fact that your deductions are improved when you have a bigger mortgage on your home, it may make more sense to first clear all your debts.
In most cases however, investing cash to avoid consumer obligations – even if it involves 0% interest – will most likely prove to be in the favor of the mortgage company. This is because all the mortgage companies keep an eye on the minimum payment on every obligation, each month. Paying more, may make you feel better, but the bank won’t applaud you for it.
If, on the other hand, you are sure you can pay off the higher down payment as well as settle off the other debts while maintaining the mortgage payment, this can be a win-win situation as soon as the consumer obligations are paid off.
Reducing your debts by as little as $500 per month may give you $100,000 additional buying power for your home! So whichever decision you make – whether it’s putting your money into a higher down payment or trying to pay off your debt with the money you have – the final decision is yours. But you need to make sure that it is something you can manage easily and that you will not be putting yourself in a huge pile of loan and payment plans which you cannot get rid of in time.
So before you begin searching for a home, the most constructive idea is to first check your credit reports and your credit scores to see how deep in the ocean of debt you actually are. You also need to make sure that there are completely zero errors in your credit reports which could be dragging down you score.