Can You Get A VA Loan?
The VA is an excellent source of financing for military members and veterans looking to purchase homes, but there are some restrictions associated with their program.
VA loans are not available for the purchase of vacation or investment property. Any home purchased with VA loan proceeds must be your primary residence.
Certificate of Eligibility
One of the initial steps toward qualifying for a VA loan is obtaining a Certificate of Eligibility (COE). This document proves that you have met certain eligibility requirements, such as the service time required.
It is easy to apply for a Certificate Of Eligibility (COE), whether you do it online or via mail. The process can take anywhere from four to six weeks, depending on the speed at which your application is submitted.
Your Certificate of Eligibility will contain your name, Social Security number, branch of service and any loans charged against your entitlement. There will also be a 2-digit entitlement code that identifies when and why you might qualify for a VA Loan.
Your COE informs lenders whether or not you`ve used VA benefits before and whether a funding fee applies to this new loan, while also listing Minimum Property Requirements, also known as MPRs, that help ensure your new home meets certain safety, structural soundness and sanitary criteria.
Minimum Property Requirements (MPRs)
The VA has set forth stringent minimum property requirements (MPRs) that your home must fulfill before being considered eligible for a VA loan. These standards ensure your house meets basic safety, sanitation and structural criteria to make it suitable for residential use.
VA may ask you to make repairs if the property does not meet minimum requirements during an appraisal. This could be before VA approves your mortgage loan. You may be required to sign a repair contract, but you can opt out if needed.
Residential MPRs include space and accessibility requirements. The MPRs for residential homes include space requirements, including living, sleeping, eating, and cooking, as well as functional, sanitary bathrooms.
If your home is located in an area that has a high risk of flooding, you must purchase flood insurance before the VA will approve your loan. This requirement does not apply if it falls within one of FEMA zones B, C or X.
Credit Score
Are You an Active Service Member or Veteran Considering VA Loans? VA loans are government-backed mortgages which enable home buyers to purchase or refinance with lower down payments and interest rates than conventional loans.
VA guarantees these loans in part. Credit is required to get one.
Private lenders also establish minimum credit score requirements before providing loans, typically between 580 and 660.
Mortgage lenders often use your Debt-to-Income ratio (DTI) to determine whether you can afford to make your monthly payments. This percentage measures how much debt (including your mortgage payment) you owe relative to income.
Pay Down Payment
VA borrowers do not typically make down payments on homes. However, it may be prudent to pay a small amount as part of the price of the home, for example, if you are buying in a seller`s marketplace or if you want to increase your chances of getting financed.
You can qualify for lower mortgage payments, better interest rates and refinancing options by making a down payment.
Home buyers making down payments typically find the VA funding fee lower than it is for non-VA borrowers; this fee provides support for the VA loan program and encourages lenders to offer loans with lower interest rates and easier qualifying guidelines.
VA mortgage borrowers also enjoy other advantages offered by these loans, including no mortgage insurance (MI). MI can cost hundreds each month; it isn`t available with VA loans.