VA Home Loan
Today in this post we are going to discuss about VA loan. In finance, a loan is a sum of money or a lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. VA home loan is guaranteed by the United States Department of Veterans Affairs (VA). The Veteran Affairs loan program is for American veterans, military members, surviving spouses of the veterans, and can be used to purchase their own homes, condominiums, multi unit properties, manufactured homes and new construction.
- How to get Pre-Approved for a VA loan?
- Can you buy a multifamily home with a VA loan
How to get Pre-Approved for a VA loan?
Buying a home can be costly, but VA loan gives the opportunity to eligible veteran’s service men’s and surviving spouses to afford a home. This can be incredible way to finance your new home. Following is the information how to get pre-approved for a VA home loan:
- You must gather your financial documents
- Choose a VA lender
- Fill out the application form
- Get your COE
- Speak to a VA loan officer
- Receive your VA loan preapproval letter
What exactly is a VA loan?
VA loan also known as Veterans Affairs is a mortgage loan in the United States guaranteed by the United States Department of Veteran Affairs. It is one of the most useful military benefits. If you qualify for VA home loan you can buy and build your own home. With VA loans, veteran, service members, and their surviving spouses can purchase their own homes. VA loan is quite different from regular loan. In this loan one does not require to pay any down payment and PMI (Private Mortgage Insurance). Moreover, it have lower interest rates. It makes more affordable to buy homes for millions of veterans and active service members.
Who is eligible for a VA loan?
Now the question arise who is eligible for a VA loan? Not all who have served in the military service is eligible for a Veteran Affairs loan. To become eligible, one needs to have to qualify the following criteria:
- You must have served on active duty for at least 90 days during wartime.
- Have at least 6 years of service either in the Reserves or National Guard.
- Have 90 days of active service under Title 10 or Title 32.
- You must be a spouse of a military service member who died on-duty or some type of service-related disability.
In order to qualify for a Veteran Affairs loan, one needs to provide with a Certificate of Eligibility (COE), which involves obtaining proof of service to verify if a Veteran meets the minimum service requirements.
Loan eligibility for surviving Spouses
Some military spouses may be eligible for VA home loan. Surviving spouses also needs a COE to verify eligibility and utilize their VA loan benefits. You may be able to get a Certificate of Eligibility (COE) if you are the spouse or widow of a veteran and at least one of these is true.
- The veteran died while in a service or a service-connected disability and you didn’t remarry
- The veteran is missing in action
- The veteran is a prisoner of war (POW)
- The veteran is disabled and then died
Note: Getting a COE as a surviving spouse depends on whether you are receiving Dependency and Indemnity Compensation. Spouses receiving Dependency and Indemnity Compensation benefits must fill out VA form (Request for determination of loan guaranty eligibility unmarried surviving spouses). If you are not receiving Dependency and Indemnity Compensation benefits, you will need to apply via VA form and submit to your states VA Pension Management Centre. You will need to provide a copy of your marriage license, the veteran’s death certificate and the veterans separation paperwork. It is important to note that the VA will deny applications from surviving spouse who had remarried.
What is the minimum credit score required?
VA does not have a minimum credit score. There is no minimum credit score required. While the Department of Veterans Affairs does not have a set minimum credit score requirement, instead private lenders do that. These lenders use particular criteria to help determine whether a person qualifies for the loan. The VA’s role in the loan process is to fund and manage the program and be sure it runs smoothly, they do not issue the loans themselves, that is left to the mortgage lenders. Although VA does not require a minimum credit score, but VA lenders generally prefer score of at least 620.
You likely won’t be approved if your score is lower than the benchmark. The credit score for a VA loan can vary depending on the type of VA loan, loan amount, the lender, and other factors, but in most cases, the lowest acceptable credit score is 580. Moreover, it is important to note that the lenders will determine whether they will approve you for the loan or not. It depends on your financial situation; they will look at the whole scenario by analyzing your financial situation rather than just looking for a specific number.
How I can apply for a Veteran Affairs loan?
In order to qualify for a VA loan, one needs to provide with a Certificate of Eligibility (COE), which involves obtaining proof of service to verify if a Veteran meets the minimum service requirements. Your COE provides the lender with confirmation that you qualify for VA loan. You can apply online or print out COE request from the VA website. If you have access to your eBenefits website you can receive your COE confirmation in just a few minutes. If you have printed out your form and wait for a mail response, you will get your Certificate of Eligibility between 4 to 6 weeks. After getting you certificate, you can take this to the lender you want to use. They will be able to begin processing the paperwork that determines you are eligible for a VA loan. Once you have determined your eligibility and brought your COE to your lender, you are ready to get started. Your bank will assist you in filling the paperwork you need to fill in order to apply for the loan. They will guide you through the whole process of determining how much you want to finance and how to get started setting up the loan.
Documents that your Lender may Require:
|Service Type||Required Documents|
|Veteran||DD Form 214 (Report of Separation)|
|Current or Former Activated National Guard or Reserves||DD Form 214 (Report of Separation)|
|Active Duty||Statement of Service|
|Current National Guard or Reserves(Never Activated)||Statement of Service and an allocated points statement|
|Discharged National Guard (Never Activated)||NGB Form 22 (Report of Separation and Record of Service) and NGB Form 23 (Retirement Points Accounting and Proof of the character of services)|
|Discharged Reserves (Never activated)||Army Reserves: DARP Form FM 249-2E or ARPC Form 606-E. Navy Reserves: NRPC 1070 -124. Air Force Reserves: AF 526 Marine Corps Reserve: NAVMC HQ509 or NAVMC 798. Cost Guard Reserves: CG 4174 or 4175.|
If you are a veteran, proud service member, or surviving spouse of a martyr, you may be eligible to utilize the VA loan to purchase you own home. This is one of the eligible opportunity to invest in home, so without any further delay apply for the Veteran Affairs loan now.
Can you buy a multifamily home with a VA loan
You know that if you are an active service member, a veteran, and a surviving spouse you are eligible for VA home loan to purchase your own home. But what are the loan procedures and the requirements for purchasing a Duplex or Multifamily property.
First of all, the question arise does the VA offers multifamily loans. The answer to this question is “Yes,” but there are certain conditions. VA loan for multifamily properties is available, but the purpose of the purchase must be primarily residential i.e., you must live in one of those multifamily units.
Can you buy a multifamily home with a Veteran Affairs loan?
Yes, you can buy a Duplex or Multifamily home with it, but there are certain conditions such as:
- If you meet the basic military service requirements for a VA mortgage.
- If you qualify based on your credit scores, income and total debts.
- If you have enough extra cash to cover six months of mortgage payments on the VA multifamily home you are buying.
- If you plan to move into one of the properties within 60 days of closing and will remain there for at least 12 months.
Steps to getting a Veteran Affairs loan for a multifamily home
There are certain steps or conditions of buying a multifamily home with a VA loan. They are:
1. If you are a veteran, service member or the member of the Reserves or the National Guard, you will need to provide proof that you qualify for a VA loan. You must apply for the Certificate of Eligibility through online or by mail and earn the certification to qualify for VA multifamily home loan. Surviving spouses may also qualify for Veteran Affairs multifamily home loan.
2. Multifamily loan limits. Even though VA does not limit the size of the multifamily loan you can get, lenders often set their own requirements based on local conforming loan limits.
3. In order to get a VA loan, you will need to meet certain VA loan requirements, including:
a) Down payment: Not required if you have enough entitlement
b) Credit Score: Even though the VA does not require a minimum credit score, VA lenders generally prefer score of at least 620.
c) Debt-to-income (DTI) ratio: In general, lenders expect your debt to not exceed more than 41% of your income, which is known as DTI ratio. You may also be able to count as income up to 75% of the verified rent, the current rent collected on the property you are buying or a fair market rent as estimated by a VA appraiser.
d) Employment history: Lenders will ask you generally that you have a minimum of two years of employment history.
e) Cash reserves: You will need to document enough extra cash to cover up to six months of principal, interest, taxes, and insurance (PITI) for each unit you rent out, which is also known as “mortgage reserves”, these funds must be easily converted to cash – checking and savings accounts are the preferred choice, but you may be able to use balances in a 401k, retirement accounts.
f) Funding fee: VA borrowers must pay a VA funding fee of between 1.40% and 3.60% depending on their down payment and whether they have used their home loan benefits before.
g) Rental management experience: The VA requires proof that if you have managed a rental property before, or have hired a property management company in order to qualify for a rental income on purchasing a multifamily home.
4. To protect the interest of VA borrowers, lenders must obtain a VA appraisal for VA finance multifamily homes.
5. Shop around with VA approval lenders
6. Find a real estate agent
7. Close of the loan
8. Find tenants and decide who will manage your rentals
1. What is a VA Loan?
Ans: VA loan is guaranteed by the United States Department of Veterans Affairs. The VA loan program is for American veterans, military members, surviving spouses of the veterans, and can be used to purchase their own homes, condominiums, multi unit properties, manufactured homes and new construction.
2. What you cannot do with VA loan?
Ans: Veteran Affairs loans are designed to fund primary residences for service members. VA loan can’t be used to purchase a home solely as an investment property or any non-residential properties.
3. What is maximum VA loan amount?
Ans: Eligible veterans, service members, and surviving spouses of veterans no longer have limits on loans over $144,000.
4. How many times can you use a VA loan?
Ans: There is no bottom line on a VA loan use.
5. What is the minimum credit score for VA?
Ans: In VA loan there is no minimum credit score requirement.
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