VA Mortgage
Those currently serving our country, as well as veterans of the Armed Forces or National Guard, and surviving spouses have access to the flexible and affordable VA mortgage loan program.
What Is A VA Mortgage?
A VA mortgage is a specialized home loan program designed specifically for veterans, active military personnel, and surviving spouses. Lenders offer VA mortgages, which are backed by the Department of Veterans Affairs. The VA doesn’t underwrite or fund the loans; it guarantees them for lenders that offer them.
VA Mortgage Benefits
Millions of people have benefited from a VA mortgage, and here are the four core benefits.
No Down Payment: If you have full entitlement, then you can buy a home with no down payment. Even if you don’t have full entitlement, your down payment requirement will probably be minimal.
VA Loans Are Assumable: Unlike Conventional loans, VA loans are assumable, even if the homebuyer is not a veteran. In a high-interest-rate environment, that is a significant selling point (if you need to sell your home).
No Loan Limits: If you have full VA entitlement, then you do not have a VA set loan limit. However, most lenders do have an overlay for this, so check with your loan officer to find out what your VA loan limit is.
Streamline Refinance: The VA loan program offers one of the best refinance programs in the industry, the VA Streamline Refinance (IRRRL). It provides amazing rates and super-fast closing times.
Get The Right VA Mortgage
Have you ever worked with a loan officer who didn’t listen and ended up giving you a mortgage that wasn’t the best fit? At California Mortgage Finder, we listen and look for ways to provide you with the right VA mortgage. We ask questions and learn about your short and long-term financial goals, then dive in and find the best VA mortgage structure to help you meet those goals.
Did you know that VA mortgages do not have mortgage insurance? Unlike their FHA counterpart, there is no upfront and no monthly mortgage insurance. The U.S. Department of Veterans Affairs created a mortgage product that is truly second to none.
California Mortgage Finder
We’re the ideal partner for your next VA mortgage transaction.
VA Mortgage Requirements
VA loan qualification is based on a specific set of requirements. Here are the six requirements you must meet to qualify for a VA mortgage.
Credit
Most lenders require a minimum credit score of 620 if you want to be approved for a VA mortgage. The VA doesn’t have specific requirements and the 620 threshold is a lender overlay. An overlay is an additional underwriting guideline that is added on by the lender. Also, lower credit scores may impact your conditions for closing and possibly your locked mortgage rate.
Income
Most mortgage programs focus on your debt-to-income ratio however that is not the case with the VA mortgage program. Guidelines are more focused on a disposable income calculation and your DTI plays a secondary role. Most of the time the disposable income rule equates to a 43% DTI, but there are instances where someone with a 50%+ DTI gets approved.
Equity
If a loan applicant is eligible for full entitlement, then there are no equity requirements (you can buy a home with zero down). And there is no mortgage insurance. If you don’t have full entitlement, then you will have to have a down payment if you want to use the VA mortgage program. And a higher down payment reduce your VA funding fee.
Appraisal
Most VA loan programs require an appraisal. The appraisal will be completed by an independent licensed appraiser. The VA Streamline Refinance program does not require an appraisal.
Asset
The VA mortgage loan program does not require assets for reserves. If you are providing a down payment, you’ll be required to send in two months of asset statements showing that amount is available.
Documentation
You’ll need to provide two years of income documentation, the standard mortgage documentation, and a Certificate of Eligibility. If you are doing a IRRRL streamline refinance; this generally does not apply.
Additional VA Mortgage Requirements
According to the guidelines of the Department of Veterans Affairs, veterans with any discharge except dishonorable and who have served the minimum required time are eligible for a VA home loan. You’re eligible after 90 days of consecutive service if you’re actively serving. If you’re separated from the service, your requirements vary from 90 days (the full period you were called for) to 24 consecutive months of service.
If you served in the National Guard or Reserves, you’d need six years of duty to be eligible.
You need just ninety days of consecutive service if you’re currently serving in the National Guard or Reserves. If you’re a surviving spouse of a veteran who lost his/her life in the line of duty or because of complications of his/her time in the service, you may also be eligible unless you remarry.
What Is VA Entitlement?
When applying for a VA mortgage, you must prove you’re eligible via your VA Entitlement. All eligible veterans get full or partial entitlement. Eligible veterans will receive a Certificate of Eligibility; this certificate demonstrates that you meet the basic requirements for a VA home loan.
If you have full entitlement, you can buy a home for any price provided you meet the necessary income requirements. If you don’t, you’ll need to make a down payment on any part of the loan that’s not guaranteed. The amount is typically low, but it’s important to understand how it works.
VA Mortgage FAQs
Can Sellers Pay Closing Costs For A VA Borrower?
Yes, they allow sellers to pay all your loan costs (up to a certain point). This means you could come to the table with $0 and close on your loan. Sellers can pay up to 4% of the purchase price in seller concessions; however, sellers are not obligated to do this.
Can A Surviving Spouse Use A Veteran’s VA Benefit?
If the veteran was eligible for VA benefits and the surviving spouse didn’t remarry, then yes, a surviving spouse can use a veteran’s benefits to buy a home to live in.
Can You Own More Than One House With A VA Mortgage?
Typically, you can only own one home with a VA loan, but exceptions exist. You must be able to prove that you have to move, whether due to your job or because you have outgrown your home. If the VA approves it, you can keep your existing home and use your remaining entitlement to buy another house.
If you don’t have enough entitlement to cover the new loan, you may need to make a down payment on the new home.
Is There a Pre-Payment Penalty?
No, there is no pre-payment penalty with a VA mortgage.
Does The VA Have A Bank Statement Program?
No, VA mortgages don’t have a bank statement option.
VA Mortgage Resources
Underwriting Process
Learn all the ins and outs of VA mortgage underwriting so that you’re better prepared before you apply with a lender.
Certificate Of Eligibility
To obtain a new VA loan, you’ll have to provide a VA Certificate of Eligibility (COE). Learn everything you need to know about the COE.
Minimum Property Requirements
VA Minimum Property Requirements (MPRs) are a key set of property standards set by the VA to ensure the home you’re buying is safe.
VA Loan Funding Fee
Some veterans are required to pay a VA loan funding fee when using their VA benefit to purchase a home. Discover all the details about the VA loan funding fee and who is eligible for a waiver.
California VA Loan Limits
Each year, the California VA loan limits are updated. Homebuyers and homeowners can determine their loan limit based on the county where the property is located.
Streamline Refinance (IRRRL)
One of the best refinance programs in California is the VA Streamline Refinance (IRRRL). Get all the ins and outs of this program, including benefits and requirements.