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Since its inception, more than 20 million people have used the VA Guaranteed Home Loan Program to help afford home loans at favorable rates. If you’re wondering how to get VA loans and whether these loans are hard to get, read more about this useful program for veterans:
VA does not offer home loans
The Veterans Administration does not provide funding for home loans. Rather, the loan amount is provided by a variety of lenders who participate in the program and know its requirements. If you are looking for a mortgage for a new home, always ask the lender if they participate in the VA Guaranteed Home Loan Program. Many institutions have special departments or specially trained staff to assist with applying for these loans. They can make sure you understand the steps involved in getting the loan.
Certificate of Eligibility Required
VA loans require a Certificate of Eligibility documenting your past or present military service. Lenders with trained personnel who work with the VA home loan program can easily obtain this document. However, in some cases, the applicant must fill out DD Form 26-1880 or other forms online or by mail in order to receive the document.
You must have a fairly good credit record
Lenders generally require applicants for the VA Guaranteed Home Loan program to have a credit score of 620 or higher. This requirement is to ensure that you are capable of repaying the loan and that you have a record of repaying your loans.
Some income requirements apply
You will need to provide documents regarding your income to assure the lending institution that you can repay the loan. This information can be in the form of a W-2 from your place of employment, income tax forms from two years prior if you are self-employed, as well as receipts from your military pension or other sources of income.
You will pay lump sum fee
The one-time funding fee is required to help pay for the VA home loan program. Currently, the funding fee is 2.15 per cent if you have zero down payment. This fee jumps to 1.25 per cent if you make a 10 per cent down payment on the home. These fees can vary depending on the type of military service and how often you use your entitlement benefits.
Down payment is not always required
Your military service allows you to qualify for a certain amount of the loan. That is, the government will guarantee payment of the loan calculated using your original eligibility amount, which is currently set at $36,000. However, a bonus eligibility may also apply which may allow you to obtain a home loan of up to $417,000 or more depending on the region. Generally, you can avail the loan without down payment up to this amount.
Home must be appraised
An appraiser must physically visit the property and determine its market value based on the structure as well as other homes in the area. The VA provides a list of minimum asset requirements that must be included in the appraisal report. These requirements include adequate living quarters; whether it is a residential property and not a commercial property; Electrical and water systems and other details in good working condition. If the property does not appraise for the value of the sale price, the buyer may have to renegotiate the sale.
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