Homestead Financial loves to help veterans save money with our affordable VA loans. Whether you’re buying your first home or need to refinance, we’ll provide you with excellent service throughout your entire process. Plus, as a direct lender, we’re the ones that approve your loan and close fast!
VA Home Loans - A Well-Deserved Benefit
For over 75 years, the Veterans Administration has been helping service members secure home loan financing. With 0% down and excellent rates - it’s hard to beat this mortgage program for purchasing or refinancing. The team at Homestead Financial knows the VA guidelines inside and out and successfully closes these loans on-time.
What’s a VA Loan?
If you’re a service member, veteran, or surviving spouse, you probably know you have home loan VA benefits, but you might not know much about the program. Read on, and we’ll start with the basics and then go over the essential parts in detail.
Homestead Financial is an approved private VA lender. We loan you the money for your home, and the Veterans Administration “secures” or guarantees a portion of the mortgage loan. The VA “guarantee” makes it more secure for lenders and also carries with it, low rates and 0% down payment. So, when you look at it like that, a VA loan is good for all parties involved.
With a VA loan, you can buy a new home, or a fixer and include repair costs, or refinance your current home and include home renovation costs.
One thing to keep in mind is, like FHA loans; a VA loan is only for your primary residence. Compared to conventional or FHA, VA has a lower down payment and almost always better rates.
VA Loan Requirements
Just like with any mortgage loan, you have to meet basic qualifications. These include:
- Valid Certificate of Eligibility (COE)
- Acceptable credit for all borrowers.
- Enough income to pay for the loan.
- Planning to live in the home.
If you don't have a valid (COE), don't worry. we can help you get one. Most of the time, we can order it online through our approved VA lender portal.
Service During Wartime
The basic requirement is that you or your spouse served 90 days or more of active duty and weren't dishonorably discharged. If you served less than 90 days because of a service-related injury, that would count too. Active duty during wartime has specific dates associated with it. You can check those dates on the VA website directly here.
Service During Peace
If you were in the service during peacetime, the main requirement is that you had an honorable discharge (anything other than dishonorable discharge). Service periods depend on your rank. You can see the periods here.
Time served in peacetime is longer at 181 days or more of active duty. Or, if less than 181 days, it was because of a service-related disability.
VA Funding Fee
There is a funding fee to get a VA loan calculated on a percentage of the loan amount. That amount increased for 2020.
It ranges between 1.4% to 3.6% depending on:
- Down payment amount.
- If this is your first use or subsequent use.
- Your type of military service.
The VA funding fee can be rolled into the cost of the loan, so it doesn’t have to come out of pocket.
If you receive VA disability or are a surviving spouse, the funding fee is waived.
VA Loan Limits
If you want a VA loan with 0% down, there's a limit you can borrow. The loan amount varies by county. VA Loan Limits for 2020 are the same as FHA’s.
- One Unit: $510,400
- Two Units: $653,550
- Three Units: $789,950
- Four Units: $981,700
Some states we lend in like Colorado, Florida, and Tennessee have larger limits for high-cost counties.
Keep in mind, your credit still needs to qualify, and the property has to be worth at least what you're paying for it.
Unlike other loans, a VA loan doesn’t have a minimum credit score requirement. The underwriter will look at the overall credit file to decide. But generally, it’s best to have a score of 620 or higher.
We look at each loan on a case by case basis which includes:
- Credit score
- Credit history
- Derogatory credit
Similar to FHA loans, VA loans have more lenient guidelines because the government intends to get veterans into a home and reward their service and sacrifices.
As with any government mortgage, you can’t be in default on any government loans. For example, if you have student loans in collections - you’ll need to handle that first.
The main thing to know is when it comes to your credit and eligibility and getting a VA loan; your loan originator is here to help you.
When our underwriter (the person who reviews and approves your loan) looks at your income - the main thing they'll be considering is if you make enough money to pay for a home. They do that by looking at your debts compared to your income.
Debt-to-Income Ratio (DTI) - That is the ratio comparing your debt (housing, credit cards, vehicle loans car) to your income. Here's how it works:
- Your gross income is $5,000 a month.
- Obligations are $2,000 a month and include a $300 truck payment, $1,600 on your new home loan, and $100 on credit cards.
- Divide your $2,000 of debts by your gross monthly income of $5,000. In this example, your DTI is 40%.
- 41% is usually the maximum debt-to-income on a VA loan, but every loan is different. Our underwriters go over all of your data to see how to get you the loan you want.
Just like an FHA government loan, VA property requirements are there to make sure the home is safe and sanitary to live in, and that it’s structurally sound.
If something is not great cosmetically, that’s not a problem and won’t need fixing to get the loan. For example, if you’re buying an older home that hasn’t been updated since the 1970s, you’re probably going to want to do some upgrades. But, you won’t need to do them before you get approved. Here’s what the appraiser will look for:
- Heating and cooling
- Final inspections
- Repairs and improvements - must adhere to the VA guidelines.
- Condos - must be approved by the Veterans Administration. You can search the VA approved condo list here.
- Manufactured homes - must meet minimum property standards, be on a permanent foundation, on land–not in a park.
Also, although the VA “recommends” you get a home inspection, it’s not required. Whereas the home inspection covers many of the same items, it will give you additional information on the condition of the real estate so that you, as the homebuyer, know what you’re getting.
VA Loans Help Our Veterans
Getting veterans into homes is a way to pay them back for their service, and there’s no other loan that does a better job. From zero down payment to the best rates of any loan, the professionals at Homestead Financial Mortgage are here to help you and your family make the dream of homeownership a reality. Contact us today.