If you are a veteran of the US military, you are probably one
of nearly 30 million people eligible for VA home loans. Meeting the
various loan requirements for these loans are easy compared to other
programs. The only hard part is the need to be a military veteran in the
If you think you are ready, be sure to get a lender who is familiar with working with this mortgage option.
VA home loans are great mortgage deals for those who qualify. Since these requirements are so much easier to meet than those for just about any other program, you should consider a VA home loan program if you serve or did serve your country in the armed forces.
Now, what makes these loan requirements so relatively easy to meet? Well to begin with, most of the time there is no need for any down payment!
So, for VA home loans, the maximum loan amount is permitted to be as much as 100 percent of the VA-established reasonable value of the property. However, VA loan amounts, in general, cannot exceed $203,000 because otherwise they could drastically distort the secondary mortgage market.
These requirements do NOT include paying a PMI, or private mortgage insurance, even if you borrow more than 80% of the property value. This is already a great monthly savings all by itself!
VA home loans allow you to negotiate a reasonable interest rate with the lender. You have got considerably more wiggle room here than you would with other home loan programs.
As a buyer, you have limits placed on your closing costs. You do not have to contact an appraiser--the lender takes care of it for you and then informs you of the property value. And, VA home loans consist of 30 year loans that give you a choice of repayment plans (including prepaying without any penalty).
You can select the traditional fixed payment. Or, you can select a Graduated Payment Mortgage (GPM) which has small initial payments that will gradually rise to a level payment and then become steady for the life of the loan in year six. Finally, in certain areas you can choose a Growing Equity Mortgage (a GEM) which has gradually increasing payments but all of the increases being put against the principal--you pay off the mortgage early!
And the Veterans Association provides personal loan servicing as well as financial counseling during financially tough times to help keep veterans from losing their homes. What other home loan program can give you that?
You can start meeting VA loan requirements by simply applying for a Certificate of Eligibility. If you do not have one, you can easily get one by applying on VA Form 26-1880, Request for Determination of Eligibility and Available Loan Guaranty Entitlement, at your local VA office.
Once you have your Certificate, you decide on a prospective home and fill out the application. The lender then orders an appraisal for you while your background and credit get checked out. You do not need to have excellent credit to meet the VA loan requirements. However, you must be deemed by the loan underwriter a "satisfactory credit risk".
Now you only need to get the VA appraised value or CRV (certificate of reasonable value). If your lender is VA authorized to do automatic processing and has LAPP (Lender Appraisal Processing Program) to streamline your loan process, then your loan can be approved and closed. No need to wait around for the VA's review of your credit application. There are some VA home loans that must first be approved by the local VA office, however.
VA loan requirements do say that you have to pay a funding fee of 2% to the VA except for certain exempt veterans. If you put down at least 5% that funding fee goes to 1.5 percent; 10% or more down reduces it to 1.25 percent. For eligible Reserve/National Guard individuals those fee numbers, respectively, are: 2.75%; 5 percent down reduces to 2.25 percent; 10% down or more reduces to 2 percent.
The usual closing costs on VA home loans are:
In general, meeting VA loan requirements includes your needing to have a DTI (debt to income) of 45% or less. However, in some instances this is permitted to be as high as 55%. VA home loans have helped many millions of Americans. If you are a veteran, do not overlook them! If you meet these VA loan requirements list, then get started right away.
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