There are many different types of loans on today’s lending market but very few offer 100 percent financing to borrowers. A VA loan is one product that does and if you are eligible, you may be able to purchase a home in a neighborhood near you. The following questions, answered, will help you determine if a VA loan is the right loan for you.
1. What is a VA Loan?
The U.S. Government implemented VA loans in 1944 to assist members of the military who returning from war to buy homes. Those who are eligible for the military loan guaranty program include those currently in the military, who were formerly in the military and those widowed by a service member are can purchase homes through this program.
2. Am I eligible for a VA Loan?
To qualify for a VA Loan you must meet the following requirements:
- You must have had 90 consecutive days of duty during a time of war.
- You must have 181 days of duty during times of peace
- You must have six years of Reserve or National Guard duty
- Or, you must be the spouse of a service member who died in the line of duty, or who died because of a service-related disability and you cannot have remarried.
3. What do I need to prove eligibility?
If you do not yet have it, you will need a certificate of eligibility if you are still in the military or a copy of your DD214 if you have separated from the military. You do not need to wait to apply for a loan before you have these documents and your lender will let you know how much you are eligible for based on your income and debt to income ratio.
4. Where can I apply for a VA Loan?
You can apply for a VA loan at approved lenders. Since the government guarantees 90 percent of a VA loan lenders look favorably on them. Since the loans are guaranteed, you will get favorable interest rates and terms. Often more favorable than if you were getting a conventional mortgage.
5. What will I need to gather to apply for a VA Loan?
Just as with any other loan, you will need to gather the following items to present to your lender when applying for a VA loan.
- Name, address and phone number.
- Previous addresses of residency of the last two years.
- Date of Birth
- Schools and years attended
- Social security of all applicants
- Copy of valid ID
- Where you plan to purchase your home
- Number of dependents and their ages
- Copy of your DD214, if you are separated from the military
- Certificate of eligibility (COE)
- Employers name, address and phone number
- List of employers, covering the last two years
- W2’s for the last two years
- If you are self-employed, you will need tax returns from the last two years with all of the schedules attached.
- You will need proof of all income including pension, retirement, social security and any 1099 income.
- You will need a death certificate or divorce decree, if applicable.
- …and any other documents required by your lender.
If you are on active duty, you will require a statement of service from your commanding officer verifying that you are active duty
6. How much can I borrow with a VA Loan?
With a VA loan, you can purchase a home with a price up to $417,000 of the total loan including closing costs. This will give you enough buying power to buy many different properties. In counties with high costs and homes that have higher than average median prices, the VA may extend the loan limit to meet the market trends so that homebuyers are able to purchase a home.
7. Will I need a down Payment?
The beauty of a VA loan and what makes it so appealing to eligible borrowers is that a down payment is not required. You may have closing costs but even they can be rolled into the loan and get you into a home with very little out of pocket expense.
8. Will I need private mortgage insurance (PMI)?
Because the U.S. Government guarantees a VA Loan, PMI is not required with a VA loan. This alone will save you thousands of dollars over the price of the loan as PMI is usually required for loans with less than 20 percent down and can cost homeowners one-half to one and a half percent of the loan amount, per year. This is an added expense that you will not have.
9. What type property can I Buy?
A VA loan will allow you to purchase any of the following:
- Single-family homes
- Fixer-uppers
- New Homes
- Homes that have been previously occupied
- Duplexes, triplexes or quadplexes if you are going to live in one of the units
- VA approved condominiums and townhomes.
- Depending on the lender, you may be able to purchase a mobile or manufactured home.
10. What if I have bad Credit?
Lenders are more favorable toward applicants for a VA loan than they are for other types of loans.
11. What if I am denied a Loan?
If you are denied, it is not due to the VA turning you down but the lender. If this happens, you can find another lender and try again.
Are you ready to Buy?
If you are in need of a home and meet the qualifications of a VA loan, you can find the home you need and be in it soon. Knowing the right questions to ask and what you need to know to apply for a VA loan will help you get started so that you can move into your new home, very soon.
2 Point Highlight
There are many different types of loans on today’s lending market but very few offer 100 percent financing to borrowers and a VA loan is one of these.
You can apply for a VA loan at approved lenders.
