Some of our top loan officers, Vice President of Sales and CEO are all Veterans. When you are searching for this type of loan, you want it being done by leaders that understand the nuances of a VA Loan. Knowing how to navigate through the Department of Defense websites and assisting in gathering veteran specific documents are a plus when you are choosing your VA Lender.
About VA Purchase Loans
The VA purchase loans is a loan program that is offered to those who have served in the military, or the spouses of those who have served in the military and passed away while on duty. This loan program is offered directly by the United States Department of Veterans Affairs, also known as the VA. The VA sets the terms of the mortgages and guarantees a portion of the loan for the eligible borrower. The VA also allows for a financial assistance to build or repair a home as well. There are strict guidelines for whether or not one is able to apply for a VA Loan.
Guidelines
You have actively served a consecutive 90 days during war time OR;
You have actively served 181 days during peacetime OR;
You have more than 6 years of service in the National Guard or Reserves OR;
You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability
Buying a home through a VA Loan Program has several differences from the USDA loan program and is more similar to the Conventional Loan Program process in regards to ease. The VA Loan program offers no money down for eligible borrowers, which is one of it’s biggest perks. Additionally, the amount of documentation required by a lender for the VA Loan program is as lenient as going through the Conventional loan process. For those looking to apply for the VA loan, there are military-specific documents that need to be obtained prior to applying.
The Process
A borrower looking to apply for a VA loan can expect the process for this loan to have a lot of similarities to a Conventional Loan. Unlike USDA Loans, the borrower can purchase any property in any location.
For the VA loan program, only the borrowers that will appear on the mortgage must submit asset and income documentation. Very similar to USDA loans, the underwriters use bank statements and pay stubs to verify the borrower’s assets and income. Any large deposits within 1 percent of the purchase price will need to be sourced with an accompanying letter of explanation, as this is required for anti-money laundering laws. This information is cross-referenced with a verification of employment that is filled out by the employer, most recent 2 years of W-2 forms or 1099 Forms and tax returns. All of these items will be needed by the underwriter to clear asset and income conditions. Additionally, the underwriter will require additional VA documents to certify that the borrower was in the military and that the VA has approved this transaction.
Homeowner’s Insurance is a requirement for most lenders at closing. If the home resides in a flood zone, then flood insurance is also required. There are no deductible requirements for the homeowner’s insurance policy like there is for USDA loans. The borrower will need to have a declarations page for the closing table to show the home will have insurance.
An appraisal report is a report that is purchased by the borrower to show the value of a property. An appraisal report is important because it gives the underwriter a sense of value that may then be compared to the purchase price, as well as an idea of the overall condition of the home. Keep in mind that an appraisal is not a home inspection. An appraisal report can cost anywhere between $300 and $600 dollars, however, for VA loans, the borrower may not be required to pay for them. Additionally, these VA appraisals are done by the VA itself, assigning a VA certified appraiser for each property. Similar to Conventional Loans, if there are repairs that are needed, the home loan can still be purchased, unless the purchase contract states otherwise.
VA Purchase Loan Requirements
The credit score requirement for this program is higher than the FHA Loan program. We would recommend a borrower’s Credit Score for this program to be 620 or higher.
This program does not have income minimum requirements or maximum limits. However, we’d recommend that a borrower’s income be enough to keep a debt to income ratio of 41 percent or less. As a program requirement, the debt to income ratio cannot exceed 41 percent.
This program does not have any location requirements prior to purchase of a property.
The VA Loan program offers a no money down option for borrowers who qualify.