There are many benefits of using a VA Home Loan guaranty, but too often there is misleading information that can discourage veterans from using them. Below is some basic information about housing benefits for veterans.
Am I Eligible?
In order to be eligible for a VA Home Loan you have to meet the following requirements:
First, you must be one of the following:
1. Veteran – To qualify as a veteran you must have served:
- 90 days active duty between 9/16/1940 and 7/25/1947 (WWII)
- 181 days between 7/26/1947-6/26/1950 (Post-WWII)
- 90 days between 6/27/1964 and 1/31/1955 (Korean War)
- 181 days between 2/1/1955 and 8/4/1964 (Post-Korean War)
- 90 days between 8/5/1964 and 5/7/1975 (Vietnam War)
- 181 days between 5/8/1975 and 9/7/1980 (Post-Vietnam War)
- 24 continuous months between 9/8/1980 and 8/1/1990 (or the full period for which you were called or ordered to active duty)
- 24 continuous months from 8/2/1990 to today.
2. Currently Serving Active Duty – with a minimum of 90 days
3. National Guard or Reserve Member – with six years of service
4. A Surviving Spouse of a Veteran
Second, you need to get your Certificate of Eligibility by going to www.ebenefits.va.gov, or you can contact a lender for assistance. Lastly, you must have suitable credit and sufficient income.
Can I Use a VA Loan More Than Once?
There’s a common misconception that you can only use your VA home loan benefits once, or only have one outstanding VA loan at a time. You can actually use your VA home loan as many times as you would like, but it does come with some restrictions and will depend on your entitlement amount if you’re trying to utilize the 100 percent financing option. You can have more than one VA home loan at a time. In fact, you can have as many as you want but again it will depend on how much entitlement you have left over and if you want to utilize the 100 percent financing option.
How Much Can I Borrow With No Down Payment?
VA loans range from $417,000 to $721,050 with 100 percent financing on a first mortgage, but the loan amount depends on what part of the country you are looking to purchase. If you purchase a home that costs more than the county limit, you are required to have a down payment.
Also remember just because you’re eligible for VA benefits doesn’t mean you qualify for a mortgage loan. Obtaining a mortgage loan depends on your particular financial situation and is subject to determination by an underwriter.
To see what your county loan limit, visit: http://www.benefits.va.gov/homeloans/purchaseco_loan_limits.asp
What Can I Buy With a VA Home Loan?
When it comes to what type of property you can buy using your benefits, you have four options:
- Single Family Home
- Condo (in VA approved building)
- Planned Urban Development (think of a subdivision that has a small association fee)
- Multi-unit Residential Building (2 – 4 units)
While each of the above are approved properties that can be purchased using your benefits, they do come with some restrictions. This is where working with an experienced mortgage lender is crucial, as they can walk you through the entire mortgage process.
What Are the Credit Requirements?
The VA itself does not have a credit score requirement, but each bank has their own. If you are worried that you may not qualify for a loan because of your credit score be sure to ask your lender what their minimum credit score requirement is for a VA loan.
What is the Funding Fee?
The VA Funding Fee is a fee the VA charges you to use your benefits. The VA collects this fee, and it is used to offset the cost to taxpayers. The Funding Fee can be paid at closing or rolled into the mortgage to be paid over the course of your monthly payments. For example if you purchase a home for $100,000 with a funding fee of 2.15 percent, and elect to roll this fee into your loan the new loan amount would be $102,150. There is one area where the funding fee does not apply, and that is if the VA has determined that you are collecting a service-related disability. If you meet this criteria, the VA will waive your funding fee (unlimited times).
For more information regarding funding fees: http://www.benefits.va.gov/homeloans/documents/docs/funding_fee_table.pdf
Learning the basics of a VA loan and how to properly use your benefits is just a small piece of the mortgage process. To better understand how to maximize the use of your benefits speak with a qualified mortgage lender to discuss what works best for you.
*Terms and conditions may vary. Subject to underwriting approval. Equal Housing Lender.