VA Guaranteed Home Loan
As in the earlier post we have discussed about VA Loan, In this post we are going to discuss about VA Guaranteed Loan which is made by private lenders to active service members or veterans.
What is a VA Guaranteed Home Loan?
VA guaranteed loan is a loan made by private lenders such as banks, savings and loans or mortgage companies to the eligible veterans or active service members[1]. Veterans, Service Members, Reservists, National Guard members are eligible for this loan and can carry several benefits such as no down payment, you will get a mortgage with a competitive interest rate etc. With VA guaranteed home loan eligible members can buy their own home or residential condominium, build their own home, repair, alter or improve their home, buy a manufactured home, refinance an existing VA loan to reduce the interest rate. They can refinance an existing home loan. A VA guaranteed home loan offers several safeguards and advantages such as:
- The VA may suspend lenders from the loan program those who take unfair advantage over Veteran borrowers, or decline to sell a new home or do partiality towards the eligible Veteran of good credit because of race, color, religion, family status or national origin.
- The builders of the new home is required to give one year warranty to the purchasing Veteran, that the home has been constructed to the VA approved plans and specifications.
- The borrower obtaining a VA loan may only be charged the fees and other charges prescribed by VA as allowable etc.
Also Read: How to get Pre approved for VA loan
Benefits of VA Guaranteed Loan
VA guaranteed loan have several benefits.
- One of the biggest benefits of is that you don’t need to pay any down payment i.e., zero down payment unless it is required by the lenders.
- With a VA guaranteed home loan, you get a mortgage with a competitive interest rate.
- The purchase price is more than the value of the property.
- One time VA funding fee.
- Can be assumed by the qualified persons.
- Equal opportunity for all qualified Veterans.
Who is eligible for VA Guaranteed Home Loan?
In general, the following peoples are eligible for VA guaranteed home loan:
- Veterans who have meet the service length requirements.
- Active Service members on duty who have served a minimum period.
- 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.
- Certain Surviving spouses of deceased Veterans.
Key Underwriting Criteria
Underwriting criteria are guidelines set by banks and lending institutions for determining whether a borrower is worthy of a loan. Underwriting standards help set how much debt should be issued, terms, and interest rates. These standards help protect banks against excessive risk and losses. Underwriting standards or VA guaranteed loan are:
- There is no debt ratio. However, the lender must provide compensating factors if the total debt ratio is more than 41 percent.
- There is no maximum loan amount.
- VA’s residual income guidelines ensure that, Veteran borrowers can afford the loan and determine how much money a Veteran must have left over after all debts and living expenses are considered.
- There is no minimum credit score requirement. Instead, VA requires a lender to review the entire loan profile.
How to Start the process or apply for this loan?
Not all who have served in military is eligible for VA guaranteed home loan. To become eligible for the 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. VA provides strict policy, guidelines, and oversight of the program. Lenders provide financing for eligible Veterans. This allows Veterans to obtain the loan without down payments or mortgage insurance premiums.
Veterans need to obtain a Certificate of Eligibility (COE). You can apply the COE online through va.gov website. Lenders also can request the COE on your behalf. Before that you should make clear that they know the VA loan program. They should also offer competitive rates and terms. Your COE provides the lender with confirmation that you qualify for VA guaranteed loan. Once you have determined your eligibility for the VA loan and brought you 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 a VA 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 and many more.
Can VA Help If You are Having Trouble in Making Payments?
VA loan techniques may be able to help you avoid foreclosure and help you to retain your home. If you are having difficulty in making your mortgage payments, contact your loan servicer. You can also contact a VA loan technician at 877-827-3702. You can also send an email at LGYLANNational.VBACO@va.gov. Keep it mind to include name and address on the loan.
There are 6 general ways that you can try to avoid a foreclosure:
- Repayment Plan – If you have missed a few mortgage payments, this plan will help you to go back for making your regular payments, for each month to cover the one’s you have missed.
- Special forbearance – This plan gives you some extra time to repay the missed mortgage payments.
- Loam modification – This plan lets you add the missed mortgage payments and any related legal costs to your total loan balance.
- Extra time to arrange a private sale – If you need to sell your home, this plan lets you delay a foreclosure so you have time to sell.
- Short sale – If you owe more money than your house is worth, your servicer might agree to a short sale. This means the servicer will accept the total proceeds from the home sale as full payment of the debt you owe. This option could result in a loss or reduction in your future home loan benefit. Contact a VA loan technician at 877- 827-3702 for more details.
- Deed in lieu of foreclosure – This plan lets you avoid the foreclosure process by signing over the deed to the home to your servicer. The home will then belong to the servicer. Contact a VA loan technician at 877- 827- 3702 for more details.
FAQs
1. What is a VA guaranteed loan?
Ans: VA guaranteed loan is a loan made by private lenders such as banks, savings and loans or mortgage companies to the eligible veterans or active service members.
2. Does a VA guaranteed loan require a down payment?
Ans: No, VA loan or VA guaranteed loan does not require down payment or mortgage insurance.
3. What is the qualification ratio for VA guaranteed loan?
Ans: The acceptable debt-to-income ratio for a VA loan is 41%.
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