VA loans are mortgage loans available to eligible Veterans, active-duty service members, and certain surviving spouses. Eligibility is based on factors such as service history, duty status, and applicable VA requirements.
It is important to understand the difference between eligibility and qualification. Eligibility for a VA mortgage loan is based on meeting VA service requirements and obtaining a Certificate of Eligibility (COE). Eligible borrowers must still meet applicable credit, income, and other lending requirements to qualify for the purchase of a home.
What are the benefits that come with VA Mortgage Loans?
The good thing about a VA loan, is that in many cases the income and credit requirements are less strict than other home loan programs. For example, here are some attractive items offered that help a potential buyer qualify for the VA mortgage easier than other loan programs, as long as they already hit the service time threshold:
- Lower required credit scores than on typical conventional loans
- Higher debt to income ratios are accepted than on typical conventional loans
- No down payment required
- No private mortgage insurance, which can mean qualifying for more versus other loan programs
VA mortgage loans Funding Fee and Other Costs
Now, in order to help sustain the VA loan program, many borrowers are required to pay a “funding fee.” The funding fee helps sustain the program into the future so the program will continue to be available to other military members and veterans. The funding fee is typically included in your initial loan amount so it is not something the buyer would have to pay out of pocket.
At this point, the only other items that the buyer could be on the hook for would be closing costs and prepaid items. As long as your home loan offer is structured correctly, the seller can pay those costs for you. It is important to know that all mortgage loan programs have closing costs and prepaid items, so if we want to limit money out of the buyer’s pocket, then we need to negotiate for the seller to pay for them.
Property Standards and VA Mortgage Loans
The part of the transaction that is a little bit more strict than conventional loans is that the VA requires any home that you purchase to meet VA Minimum Property Requirements. The VA mortgage loan is not generally designed for someone to buy a “fixer-upper.” As part of the appraisal process, the VA-approved appraiser will also identify readily apparent conditions that may not meet VA requirements for the property to be safe, structurally sound, and sanitary.
While this may be viewed as a hang-up, a knowledgeable realtor should be able to show you homes that generally meet the VA guidelines upfront. If VA-required repairs are discovered through the appraisal process, buyers and sellers do have the opportunity to address these deficiencies in order to successfully complete the transaction.
This is just a brief summary of some of the highlights, but the main draw of this program is to help our active-duty military personnel and veterans become homeowners with as little money out of pocket as possible. For more information on how to start your journey toward homeownership with a VA mortgage loan, contact our expert team today!
FAQs for VA Mortgage Loan Qualification
VA loans typically have more lenient credit and income requirements compared to conventional loans. This includes lower required credit scores, higher accepted debt-to-income ratios, no down payment, and no private mortgage insurance, making it easier for eligible buyers to qualify.
Eligibility for a VA loan is based on meeting VA service requirements and obtaining a Certificate of Eligibility (COE). Qualification is separate and depends on meeting the lender’s credit, income, and other mortgage requirements.
Yes, in some cases, surviving spouses of veterans can qualify for a VA mortgage loan. Eligibility criteria for surviving spouses include being unmarried or remarried after a certain age and the veteran having died in service or from a service-related disability. Specific eligibility conditions should be verified with the VA.
