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
Facts About VA Loan Eligibility
For new homebuyers, one of the most arduous processes can be figuring out how to pay for their new house. There are many options for loans but how do you know which one is right for you? If you’re a United States veteran, a loan through the Department of Veterans Affairs is the best choice for a home loan you can make, as it is specifically designed for you and in most circumstances, requires no down payment. One can apply for a VA Loan eligibility with any lender that has a program for VA home loan.
Barring a few special circumstances (discharge due to hardship, service-connected disability, surviving spouses of veterans), VA loans are for veterans, military personnel currently on active duty National Guard & Selected Reserve members. The VA website offers minimum service requirements and qualifying dates for each status. Once that has been established, and you have found a home you desire to purchase, you will need to apply for a VA Loan Eligibility certificate.
Once approved, speak with a lender at a financial institution such as a bank or mortgage company.
Though VA loans are meant for military personnel, that doesn’t mean you are automatically entitled to one. Just like any other loan, you will be approved or declined based on your current financial status. Factors such as a bad credit rating or a previous bankruptcy will hurt your chances for approval.
If you filed for bankruptcy, that doesn’t mean you have completely forfeited your chance of being eligible for a VA home loan.
There are several circumstances that could have it disregarded. For instance, if your bankruptcy was discharged over two years ago, or if you have brought your credit back up to an acceptable rating and the circumstances that lead to the bankruptcy were out of your control, such as medical bills and/or being out of work. If your bankruptcy filing was discharged in the last year, then it is best to wait for another year or so. Otherwise, your lender is more likely than not to decline you.
If you are applying for a VA home loan for a second time and are not making a down payment on your home, your funding fee will be higher, by a bit.
The reason being that the reduced fee is more intended for first-time buyers and the time in between purchasing your first and second time should be adequate to save for the funding fee. If you are making a down payment, this can be reduced based on the percentage of said down payment. VA home loans are an excellent choice for veterans in good financial standing looking for a home.
Common Myths VA Loans
VA loans are among the best benefits that military personnel enjoy. This program not only offers one of the most flexible guidelines in the home loan market, but also promises 100% financing as well as refinancing of the mortgage. Sadly enough, not all veterans are fully aware of all the benefits of this program and this knowledge gap keeps them from making the best financial decisions. The VA loan program has evolved a lot over the years, but it is not difficult to understand. So, here is the first step towards ‘un-complicating’ this amazing financial product. These are the most common myths VA loans. Let’s get debunking.
1. It is a one-time loan
No, VA loan is not a one-time benefit. A veteran can benefit from a VA loan multiple times in their lifetime, as long as they fulfill all the necessary requirements laid down for accessing the loan. There is no limit as to how many times a veteran can use their VA loan.
2. VA loans offers small amounts that can fund only small homes
This common myths VA Loans is absolutely not true. The amount disbursed under a VA loan can vary from applicant to applicant, depending on their unique case. The loan amount can be as much as $1,000,000. That money can buy a pretty big home. Moreover, VA can be used for refinancing as well. This amount can reach 100% of the home value in many cases. So, the loan can not only be used to buy a house, but to refinance a loan as well.
3. It is a Government program. The process is slow and the requirements are more stringent.
This is quite the opposite of what VA loans actually are. This loan product has been designed for the veterans and its primary aim is to make it easier for them to take advantage of it. It is actually easier for a veteran to get a VA loan. In fact, the Veterans Association of Real Estate Professionals (VAREP) maintain that these loans actually take less time to close than the traditional loans by as much as two days.
4. Vets serving overseas cannot apply for a VA home loan until they return
Men and women serving the country overseas can most definitely apply for the loan. The condition is that either their spouse should be able to occupy the property while they are away or they have plans to return to the country within a year of applying for the loan.
5. Active service men, National or Reserve Guard and widow/widowers are not eligible for a VA loan
Any applicant falling in any of these three categories is 100% eligible for a VA loan. National or Reserve guard need a 6-year service record to become eligible. Widows and widowers of military personnel who lost their lives during active duty or died due to a service related injury are also eligible for the program.
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.