Hello, my name is Ryan Vucic with Cascadia Home Loans. I'd like to first thank you for your service and sacrifice to our country. While reading it may be helpful to take notes and write down questions so that we can discuss them later. I look forward to discussing your benefit eligibility with you!
Demand has been sizzling for Veterans Affairs mortgages, better known as VA loans. These mortgages do not require a down payment in most cases. VA loans are available to military veterans and active military members. VA loans are made through private lenders and are guaranteed by the Department of Veterans Affairs, so they do not require mortgage insurance.
The VA loan remains one of the few mortgage options for borrowers who don't have the money for a down payment. Available to millions of veterans and active military members, VA loans are somewhat easier to qualify for than conventional mortgages.
The U.S. Department of Veterans Affairs is not a direct lender. The loan is made through a private lender and partially guaranteed by the VA, as long as guidelines are met.
Most members of the military, veterans, reservists and National Guard members are eligible to apply for a VA loan. Spouses of military members who died while on active duty or as a result of a service-connected disability may also apply.
Active-duty members generally qualify after about six months of service. Reservists and members of the National Guard must wait six years to apply, but if they are called to active duty before that, they gain eligibility after 181 days of service.
Most reservists are qualifying under active duty. Reservists, members of the National Guard and active-duty members generally are eligible after 90 days of service during war periods. If you were on any type of foreign soil, more than likely you are eligible.
Potential borrowers must obtain a certificate of eligibility. You don't need the certificate of eligibility in hand to start the mortgage process, your mortgage broker will get this document for you during the preapproval phase
Advantages of a VA loan
Loans guaranteed by the VA can often be obtained without any down payment.
Another plus: A VA loan doesn't require mortgage insurance, as do Federal Housing Administration and conventional loans with less than a 20 percent down payment. The benefit translates into significant monthly savings for VA borrowers. For instance, a borrower who makes a 3.5 percent down payment on a $200,000 FHA-insured mortgage pays $100 a month for mortgage insurance alone.
With a VA loan, you don't have to save all the money you would have to save for a conventional loan.
Although the costs of getting a VA loan are generally lower than for other types of low-down-payment mortgages, they still carry a one-time funding fee that varies, depending on the amount of the down payment and the type of veteran. These fees are specific to the applicant and home being purchased, your mortgage broker will discuss these fees during your application process.
If you receive disability compensation, the fee is waived. A borrower in the armed forces getting a VA loan for the first time, with zero down payment, would pay a fee of 2.15 percent of the loan amount. The fee is reduced to 1.25 percent of the loan amount if the borrower makes a down payment of 10 percent or more. Reservists and National Guard members normally pay about a quarter of a percentage point more in fees than active-duty members pay. Those using the VA loan program for the second time, without a down payment, would pay 3.3 percent of the total loan amount.
Veterans Affairs does not require a minimum credit score for a VA loan, but lenders generally have their own internal requirements. Most lenders ask for a credit score of 620 or higher. There are lenders that would go lower, but they would probably charge a higher interest rate.
Your mortgage will work with you, if your credit score is insufficient. During your application we identify areas in your credit report, that need improvement and refer you to a credit repair agency.
Borrowers must show sufficient ability to repay the loan and shouldn't have excessive debt, but the guidelines are usually more flexible for a VA loan than they are for conventional loans.
VA Loans also allow Veterans and active military to bounce back faster after a bankruptcy, foreclosure or short sale. You can be eligible for a VA Loan two years after a Chapter 7 bankruptcy discharge; one year after filing a Chapter 13 bankruptcy; and two years following a foreclosure.
VA loans are available only to finance a primary home. A VA loan cannot be used to purchase or refinance vacation and investment homes.
The VA says there is no cap on the amount you can borrow. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.
The limit on VA loans vary by county, but it's $417,000 in most parts of the country and up to $625,500 in high-cost areas in the continental United States and even higher in four counties in Hawaii.
What if I stop paying the mortgage?
Another advantage of a VA loan is the assistance offered to struggling borrowers. If the borrower of a VA loan can't make payments on the mortgage, the VA can negotiate with the lender on behalf of the borrower.
Obtaining a pre-approval with Cascadia is the place to start. It takes about 10 minutes and is totally free.
If you would like to explore the benefits you qualify for as a veteran, please contact me and I will help you get started. We can complete your application over the phone, in person or through email, in about ten minutes. I specialize in helping veterans utilize the VA loan program and take great pride in helping brave veterans who sacrificed so much for our country.