VA Loan Guide

Veterans Administration Mortgage loans are another of the amazing benefits the VA provides. The VA Home loans benefit has already helped more than 24 million veterans qualify for a home loan. VA interest rates are still near all-time lows, and VA mortgage loans are a great way to purchase a home with little-to-no money down. That 100 percent finance loan also involves no monthly insurance cost requirement, which is another great perk, in addition to the VA rates.  

While VA loans are an important benefit, you should be aware of the recent updates to the VA loan structure. Information is power and these essential details will give you the ammunition you need to need to move forward with buying your new house. You’ll see why it’s such a great time to buy right now.  

What Are the Eligibility Requirements for a VA Purchase?  

If you’re a Veteran, you’ll probably find that it’s easier to qualify for the VA mortgage loan compared to Conventional loans or even USDA or FHA loans. We already mentioned the favorable terms, but you may not know why the VA rates are so great for first-time home buyers.  

The Department of Veterans Affairs explains: “VA guarantees a portion of the loan and this backing allows the lenders and banks to provide you with more favorable terms.” Even with that partial guarantee, you’re still required to meet these minimum qualifications for VA Home Loans. 

• You’ve served 181 days during peacetime – active-duty veteran.  
• You’re on active duty right now, with 90 continuous days of service.  
• You were discharged because of a hardship. 
• You served in the National Guard or Reserve for six years. 
• You served 90 days in wartime – active-duty veteran.  
• Your spouse died – active duty or a service-connected disability.  

While the eligibility requirements are broad, those service members who were dishonorably discharged are typically not eligible. Still, these requirements are intended to make sure that most active-duty personnel and veterans can get the loan.  

How Do You Qualify for a VA Loan or VA Refinance? 

The Department of Veterans Affairs has established specific qualifying requirements as well for VA loans. Here are the updated details.  

• You must have “suitable credit.” While the Department of Veterans Affairs does not define a specific credit score, most lenders need ~600 minimum to approve the 100 percent financing. A lender may approve a Veteran with lower credit provided the loan includes a down payment.  
• You must have a valid Certificate of Eligibility (COE). Other documents include the Uniform Residential Loan Application (URLA), the DD Form 214 if you’ve left military service and other standard VA documents.  
• You must have “sufficient income.” You are required to show proof of two-year work history, with no unexplained gaps. You’re typically also required to provide tax returns, a bank statement and W-2 forms. Your debt-to-income ratio should be lower than 43 percent.  
• For your VA loan to be successful, you must plan to live in the house as a primary residence. The VA has specific qualifying requirements that the house can’t be an investment or a “second home” dwelling.  
• You must get an appraisal of the property by a licensed appraiser to determine that the worth does not exceed the VA loan limits for the country in which it is located. The purpose of the appraisal is to guarantee that the house is “adequate collateral for the requested loan.” 

When you qualify for the VA loan, it’s a lifetime benefit. So, you can use it multiple times during your lifetime. The VA offers the full details in the Buyer’s Guide.  

Benefits of VA Loans 

We’ve already touched on a couple of the benefits, but it’s worth reiterating why VA loans are such great options for veterans right now. Here are a few of the top benefits of VA loans.  

1. No Private Mortgage Insurance (PMI). Typically, homebuyers who have a down payment of less than 20 percent for a conventional loan are required to pay for mortgage insurance. That’s not the case with VA loans.  
2. No down payment. The VA Loan finances up to 100 percent of the purchase price with no down payment required.  
3. Best loan rates. Credit unions, US banks, mortgage lenders and savings-and-loans institutions offer VA loans. So, you can compare loans to find the best offers and rates with options that will best sync with your budget.   
4. The closing costs are lower. The Department of Veteran Affairs puts limits on the closing costs, which makes the entire home-buying process more affordable for Veterans.  
5. The loans are assumable. That means that you can transfer the loan to another home buyer. You just need to make sure that the buyer is eligible and qualified for a VA loan.  
6. There’s no prepayment penalty. So, you can sell the property without a time frame requirement. You can also refinance your VA loan or transition the loan into a non-VA loan.  
7. There are lots of varieties. You can select an adjustable rate or fixed rate. You can also refinance an existing mortgage to cover home improvement and efficiency costs.  

Thanks to the Blue Water Navy Vietnam Veterans Act of 2019, VA loan limits were repealed. That means that there’s no maximum amount for a VA loan. Of course, your situation will inform which options will work best for your needs. That’s why it’s so important to work with a lender who can best meet your needs both now and in the future.  

Our ReviewMyMortgage.com PRO Lenders can help you narrow down and identify the best VA loan program for you. We offer education on a range of loan options, designed to meet your needs, including but not limited to Conforming & Non-Conforming, as well as VA Loans. TexVet allows you to research and empower yourself with the information you need to make the best decision.