VA Loan Guide
Loan Type: VA Home Loan
Specific Uses: 100% Financing, First Time Home Buyers, Refinance, 0% Down Payment, Debt Consolidation, Veteran Households, Remove Mortgage Insurance, Cash Out.
What is a VA Mortgage?
A VA Home Loan Mortgage is guaranteed by the Veterans Administration. It is a loan that is guaranteed by the government to the bank or lender in case of a default by the Homeowner(s). This is a great loan option for family’s who have served in the military. It is a great choice for first time home buyers, refinancing, cash out refinances, 0% down payment ability, debt consolidation and military households. These are not the only reasons why VA loans are appealing, they may be assumable as well. This loan is also known as the GI Bill. VA Home Loans may be either fixed or adjustable rate mortgages.
VA Home Loan Summary:
A VA Home Loan is an Assumable Mortgage which means that the mortgage may be taken over by surviving spouse. The borrower that is taking responsibility must still qualify for the mortgage per guidelines set by the specific bank or lender. VA Home Loans provide 100% Financing.
A VA Home Loan provides a way to do cash out on a refinance as well through their (IRRRL) Program. This means that you are taking the equity out of the property and receiving the equity in a form of lump sum cash.
VA Home Loan Guidelines:
- DTI: (Debt-to-Income) Ratio 63% (Depending on the type of VA Loan.)
- COE: Certificate of Eligibility (DD214’s will be used to acquire COE)
- Termite Inspection: Required
- Max Loan Amount: This depends on the county and its Loan Limits
- Income: 2 Years full tax returns required
- Min Credit Score: 620 (depending on Lender)
- Max CLTV: (Combined Loan-to-Value) on an VA Home Loan is 100%
- Max LTV: on a Cash Out Refinance is 90%
- Collections: Any Collection balances over $2,000 must be collected or have made payment arrangements prior to closing.
- Cash Out Max: There is no maximum cashout amount. Depends on county loan limits.
- Down Payment: 0% Down Payment required on VA Home Purchase loans
- Missed a Payment? Only two 30 Day Mortgage Late Payments allowed in the last 12 months.
VA Home Loan Facts:
- VA Loan Interest Rates are lower than Conventional Home Loan rates.
- VA Loans do not require Mortgage Insurance.
- VA Loans do cover Manufactured Homes. (Depends on whether Lender will cover)
- Primary Residences only. No investment properties.
- Low closing costs.
- Appraisal required on Purchase and Refinance VA Home Loans.
- No Appraisal required on IRRRL (streamlined VA Refinance)
- No Reserves Required.
- No Escrow Required by VA. (Lender might require escrow though)
- IRRRL = Interest Rate Reduction Refinance Loan. This is a VA Cashout Loan type
- Debt-to-Income Ratio’s on a VA Home loan are usually higher (better) for borrowers with income qualifying issues.
- Funding Fee = 0% – 3.3% of Loan amount (depending on when VA Loan was obtained)
- Funding Fee can be waived if Veteran is 10% or more disabled.
- Minimum FICO (Credit Score) Required = 620. Sometimes lower depending on the Lender.
There is still much more information about VA Home Loans provided by the Veteran Administration. Reach out to your bank or lender for more specifics on what you can qualify for.
As we like to say here at HC: Ask. Learn. Save.
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