VA Loans Explained
If you’re eligible for a VA loan, this is your best option as a first-time homebuyer.
You must meet ONE of the following conditions to be eligible:
• Served 90 consecutive days of active service during wartime
• Served 180 consecutive days of active service during peacetime
• You have more than 6 years of service in the National Guard or Reserves
• You are the surviving spouse of a service member who has died in the line of duty or because of a service-related disability
Veterans must also have received an honorable discharge to be eligible.
Benefits of a VA Loan:
• Lowest rates available
• Zero down payment up to county max loan limits
• No mortgage insurance
• Unlimited loan amount with down payments of 25% of amount exceeding county loan limits
• Most lenders require a 620 minimum FICO, but some go as low as 500 on a case by case basis
• It’s possible to buy a home with zero out of pocket costs
• Sellers can pay closing costs, up to 4% of the loan amount
• If you’re able to select a slightly higher interest rate, you’ll receive a credit from the lender that can cover closing costs
Other Requirements of a VA Loan:
• First time buyers pay a VA Funding Fee of 2.15% with zero down, which can be financed.
Note: Veterans that collect VA Disability are exempt from paying the Funding Fee
• Co-borrowers can only be a spouse or another VA eligible borrower
• Condos must be in a VA approved condominium project
• Debt to income is 41%, but can go up to 60% on a case by case basis
• If the ratio is over 41% you must meet a residual income requirement
• A portion of your income that remains after subtracting your liabilities, needs to meet VA guidelines.
• Subtract your future monthly housing payment and subtract all revolving and installment debt, and alimony/child support payments, if applicable
• For example, the residual income guideline for a family of 2 in the West is $823
After purchasing your home with a VA loan, another great benefit is the VA Streamline Refinance. After your sixth scheduled monthly payment, if rates drop, only your FICO score and mortgage payment history are considered when refinancing.
We are VA loan specialists. See our VA Page on our website for Live Rates and more VA info.