Designed to offer long-term financing for American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the Veterans Administration. The VA determines eligibility and issues a Certificate of Eligibility to qualified applicants (your mortgage lender can help get this for you). It is generally easier to qualify for a VA loan than conventional loans.
Here’s how it works:
- 100% financing without private mortgage insurance.
- A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA. The funding fee is determined by type of military service, tenure of service, if used prior, and if veteran receives disability income.
- When purchasing a home, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less.
- Seller can pay for all of the borrower’s closing costs; allowing the veteran to purchase a house with no money in the transaction.
Through dedicated service to our country, military service members and veterans qualify for a range of benefits earned through their service. Chief among those benefits is an opportunity to take part in the home loan program.
The VA Loan is designed specifically for those who served, but there are a handful of requirements which must be verified. In order to qualify for a VA Loan there are specific service conditions each borrower must meet. Generally, borrowers can qualify for a VA Loan with more than 90 consecutive days of service during wartime or more than 181 days of service during peacetime. Service members and veterans may qualify with more than six years of service in the National Guard or the Reserves. Spouses of a service member who died in the line of duty or who died from a service-connected disability may also qualify.
The Department of Veterans Affairs will determine your eligibility based on your service record and issues your Certificate of Eligibility (COE). For those interested in obtaining their COE, you may go directly to the VA to apply for your COE, or you can contact me on cell phone or email and I’ll help you secure your COE.
Although the VA determines the guidelines for those who are eligible for the VA Loan benefit, mortgage lenders also have an additional set of criteria that a potential borrower must satisfy, including debt, income and credit requirements.
When you apply for a VA Loan, your VA mortgage lender will pull your credit report to check your score, as well as examine your debt-to-income ratio and calculate how much money will be needed to settle the purchase.