Guidelines To VA Loans

A VA loan is a mortgage loan in the United States that is guaranteed by the US Department of Veteran Affairs. It is a federally guaranteed home loan with no down payment requirement. If you are planning to get a VA loan, then this article will help you to get the details you need to proceed smoothly.

What is VA Loan and How Does it Work?

A VA loan is a mortgage loan available through a program established by the United States' Department of Veterans Affairs and came into known in 1944. VA loans assist service members, veterans and eligible surviving spouses to achieve their dream of home ownership. The VA sets the qualifying standards, dictates the terms of the mortgages offered and guarantees a portion in terms of the loan. VA home loans are provided by private lenders, such as banks and mortgage companies. It helps in the growth of the nation's economy through the welfare of the veterans and their families.

VA loans offer 100% financing on the value of a home. VA loan recipients do not have to be the first-time home buyers, whereas, they can reuse the benefits and assign the loan to another qualifying person once they get the loan.

Terms and Benefits of VA Loan

There are great VA loan benefits for the veterans and their subsidiary family members. Some of these are mentioned as under:

Ø  A VA loan requires zero down payment, if the purchase price of the property is within the established property value limits.

Ø  It doesn't require any private mortgage insurance.

Ø  The closing costs of the loan are limited saving the veteran from overcharging on fees.

Ø  No prepayment penalty by the lender is another important benefit of VA home loan.

Ø  Veteran Authority also provides assistance required to help the borrowers to avoid any default on payments.

Ø  Many states offer additional benefits to veterans, such as reductions in property tax, etc.

Do I Qualify for a VA Loan?

To become eligible for a VA loan, you need to satisfy certain requirements and guidelines set forth by the VA department.

·         Debt-to-income ratio: Although VA doesn't specify any maximum debt-to-income ratio, if the total debt-to-income ratio is over 41%, lenders will need to provide proof of the veteran’s ability to repay the loan as per the VA home loan policy.

·         Property requirements: Single-family home owners are the standard when pertaining to the VA Loan. However, other types of housing can also be approved to win VA loan which includes condominiums, town homes, modular homes, newly constructed or manufactured homes, etc

To determine whether the potential complex is eligible or not, the VA provides an interactive list of approved complexes.

·         Service requirement: There are two types of service requirements such as wartime and peacetime and a potential buyer should satisfy any one of these requirements as set by the department of VA to become eligible for the VA mortgage loan. Make sure to provide your DD 214 to the lender to verify your eligibility. 

·         Certification requirements: The applicant must have all the required certificates that can prove their ownership, income, debt, etc and can be considered as the certificate of eligibility to get the VA loan.

Some of the VA loan guidelines

·         A VA funding fee is required by law, but there are exemptions for some veterans who suffered from disabilities during their services. This will be determined on your Certificate of Eligibility.

·         If a veteran has already used a portion of his or her VA loan entitlement,then the used portion cannot yet be restored and any partial remaining entitlement would be available.

·         A current home owner must show timely payments for the previous 12 months and can serve as a guide and demonstrates their willingness to repay a new VA home loan.

·         The law on occupancy requires a veteran should obtain a VA guaranteed loan to certify that he or she intends to personally occupy the property as his or her home.

Important VA loan facts

Rob has helped hundreds of people with their real estate financing. With his experience, he knows all the important guidelines, facts, benefits, etc relative to various home loans such as VA loan, FHA loan, etc. If you still have any doubts or questions to ask, feel free to contact him directly.