A Beginner’s Guide to VA Loans
Serving in the armed forces is one of the noblest jobs out there. Our esteemed military personnel work tirelessly to protect our shores and defend our freedoms. Therefore, if anybody deserves to own a home, it’s our nation’s 1.4 million active military personnel and 19 million veterans. But what if you’re in the military but can’t afford to purchase a home? That’s where VA loans come in.
If you’re eager to know what VA loans are and how they work, read on! Here’s a comprehensive beginner’s guide to VA loans.
What Are VA Loans?
Imagine being offered financial support to buy your dream home after you’ve spent numerous years protecting the country. That’s exactly what VA loans are for!
VA loans are mortgage loans issued to active or former members of the armed forces. They’re backed by the United States Department of Veterans Affairs (also known as the VA) and help military personnel, veterans, and their spouses become homeowners.
How Do VA Loans Work?
VA loans are typically provided by private mortgage lenders and a portion of the loan is guaranteed by the VA. This ensures the terms on VA loans are more favorable than other home loans such as conventional mortgage loans. VA loans are non-conforming mortgage loans because they don’t adhere to the requirements set by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).
What Makes VA Loans Better than Other Types of Mortgage Loans?
1. They Don’t Require Down Payments
Dreaming of securing a government-insured home loan that requires no payment upfront? If you’re in the military, the VA makes this dream a reality!
VA loans are one of the only two government-insured loans that don’t require a down payment if the sale price of the property doesn’t exceed the appraisal price.
2. They’re Often Issued to Borrowers with Low Credit Scores
If you’ve undergone financial struggles in the past, chances are your credit score is low. Fortunately, most mortgage lenders are quite lenient when it comes to issuing VA loans to borrowers with low credit scores. However, this varies from lender to lender.
Some mortgage lenders compensate for the risk of receiving no down payment on VA loans by increasing their credit score requirements. Other mortgage lenders don’t require a high credit score nor a down payment but compensate for risk by charging high premiums on the loan. We recommend speaking to your mortgage broker to find out their specific requirements for VA loans.
3. There’s No Limit on VA Loans if You Have Full Entitlement
Did you know the VA doesn’t set a limit on how much you can borrow through VA loans if you have full entitlement? In other words, it’s possible to secure VA loans no matter how expensive your desired property is if you’ve never used your home loan benefit. Alternatively, you must show that you’ve paid off a previous VA loan and sold the property or you’ve paid off a foreclosure claim to the VA to qualify.
What Are the Requirements to Apply for VA Loans?
1. Proof of Service
Imagine if mortgage lenders didn’t check for proof of service before issuing VA loans. There’d be a ton of people lying about serving! Mortgage lenders prevent this type of fraud by asking for several things before issuing VA loans.
The mortgage broker will ask you to prove that you’ve actively served for 181 days or more during a time when the country wasn’t at war. Alternatively, you’ll be asked to prove you’ve served for either 90 consecutive days when the country was at war, or you’ve served for more than 6 years in the National Guard or Reserves. It’s also possible to qualify for VA loans if you’ve spent 90 days under Title 32 with at least 30 days of consecutive service.
No matter what branch of the military you’re serving in, you must obtain a statement of service from your unit commander or equivalent to apply for VA loans. The statements must include your full legal name, date of birth, and social security number.
2. Marriage Documents
Did you know you’re eligible for VA loans if you’re the first spouse of an active or retired military service member? You can become a co-borrower on a VA loan if you provide legal documents confirming your marriage. However, it’s worth noting that your income and credit history will be considered by mortgage consultants when assessing your loan application. Therefore, you must prepare income statements, W-2 forms, and check your credit score before applying for VA loans.
Unfortunately, many service members that lose their lives in the line of duty leave behind their spouses. If you’re a surviving spouse, you’re eligible for VA loans if you provide a certificate of eligibility (COE) from the VA. This also applies to spouses of service members that lose their lives due to a service-related disability.
3. Evidence of Military Discharge
Thinking of applying for VA loans after being discharged from active service? If so, you must provide evidence confirming your discharge.
This includes an NGB Form 22 and Form 23 if you were in the National Guard, or a copy of your retirement points statement if you were in the Reserves.
If you’re a member of the armed forces and are looking for VA loans, our team of seasoned mortgage consultants is ready to welcome you at Atlantic Home Capital. We’ve helped countless clients obtain mortgage loans at the best possible rates—from VA loans for military personnel to modular home loans in Ft. Lauderdale for those looking to buy prefabricated homes.
Find out first-hand why we’re held in high regard by our clients by leaving us a message on our website. Alternatively, call our New York office at 631-687-3510 or our Florida office at 888-822-1188 any time between 9 am and 5 pm on weekdays.
