One of the most common questions we’re asked here at City Creek Mortgage is, “What kind of loan do I qualify for?” The answer: it depends. While most mortgage loans are based on your credit score and financial situation, VA loans require homeowners to either be active duty or have veteran military status in order to qualify for one.
If you have served our country and are looking to buy a house, we can help. Here are answers to some of the most commonly asked questions about VA loans and eligibility requirements.
What is a VA Loan?
First up, let’s answer the most common question: what exactly is a VA loan?
A VA home loan is a type of home loan that is available through the U.S. Department of Veterans Affairs. They are available to veterans and active-duty service members, as well as their surviving spouses. However, there’s a caveat to this, as not every military member will be able to qualify for a VA loan in every circumstance.
For example, you must meet the following criteria in order to qualify for a VA loan:
- Minimum of 181 days of active duty service during peacetime (military operations outside of war)
- 90 days of consecutive active duty service during wartime
- At least six years of service with the National Guard/Reserves. Under Title 32, at least 30 out of 90 days should have been consecutive service.
- Your spouse passed away in the line of duty or due to a disability that was sustained as a result of military service.
VA loans are not issued through private lenders and instead are backed by the federal government.
Benefits of a VA Loan
VA loans offer excellent benefits to homeowners. Some of the most common benefits for those who are eligible for a VA loan include but are not limited to:
- No down payment required through the VA.
- Also no need for private mortgage insurance, or PMI.
- No end date, meaning military members can use VA loans more than once.
- Low-interest rates.
- Limited closing costs. In some cases, they may be paid entirely by the seller.
- No penalties if you pay off your loan early.
- VA assistance to prevent defaulting on your loan if you can’t pay.
Are There Different Types of VA Loans Available?
Yes, there are. Generally speaking, there are four types of VA loans available to those who are eligible for them. These include the following:
- Native American Direct Loan: Available to Native American veterans, this type of VA loan can help finance the construction, purchase, or improvement of a new home on a federal trust land. A trust land is where the federal government owns the legal title of the land, but the individual and/or tribe of the land inherit all the benefits.
- Cash-Out Refinance Loan: With this type of loan, homebuyers can borrow against the home’s equity (or value) to make improvements on the home, pay off debt, or enroll and fund their education. In exchange for these benefits, homebuyers will pay a larger mortgage.
- Home Purchase Loans: As one of the most common and popular types of VA loans, homebuyers using this will be able to purchase a home at a competitive interest rate. They will not be required by the VA to make a down payment on the property, nor will they have to enroll in private mortgage insurance, unlike conventional mortgage loans.
- Interest Rate Reduction Refinance Loan: This kind of loan allows homebuyers to refinance their existing VA loan in exchange for a lower interest rate or convert their adjustable mortgage rate into a fixed one.
What to Expect With a VA Loan
If you’re eligible for a VA loan and want to move forward, there are a few things you should expect throughout the duration of the process.
First, you’ll have to give your lender a certificate of eligibility from the VA that states you’re either active duty military or a veteran. You can obtain this Certificate of Eligibility from the VA’s website.
Please keep in mind that the type of documentation you’ll need may vary depending on your military status. Active duty military need a statement of service signed by their adjunct, unit commander, or personnel officer before they apply for a Certificate of Eligibility. This form should include your full name, Social Security number, and birthday, as well as the date you joined the military and any breaks you took. Current members of the National Guard will need to provide the same evidence.
Surviving spouses will need to show their marriage license, spouse’s death certificate, DD Form 214, and 21P-534-ARE. Those who were honorably discharged will need to submit a copy of their annual Retirement Points Statement, as well as proof of service and discharge. Those who were discharged with the National Guard will need to show a record of service, their Report of Separation, NGB Form 22 and 23, as well as proof of character of service.
The second thing you should know about VA loans is that there isn’t a cap on how much money you can borrow. If loan limits do apply, they follow suit with conventional loan limits. This means if you want to obtain a jumbo loan, you can still do so.
How Long Does it Take for Pre-Approval for a VA Loan?
With all the proper paperwork, you can be pre-approved for a loan in as little as 24 hours.
Ready to Obtain a VA Loan? The Team at City Creek Mortgage Can Help
You dedicated your time to protecting others. Let us return the favor by helping you obtain a VA loan. The team at City Creek Mortgage knows the ins and outs of VA loans. We’ll be happy to answer any questions you have about what to expect from the process. Call us today at 801-501-7950.