A VA loan, or a mortgage backed by the Department of Veteran Affairs, can be an enormously beneficial part of buying a home for a veteran or their family. These loans come with lower interest rates than conventional loans and often no down payment, despite the fact that there’s no mortgage insurance requirement.
At City Creek Mortgage, we’re proud to provide the ability for you to get or refinance a VA mortgage loan. We often get questions from veterans or their families about standard eligibility for these loans – let’s take a look at some of the basics.
You’re entitled to apply for a VA loan if you’re on active duty or have separated from military service under an “other than dishonorable discharge,” per the VA. In addition, some other requirements:
- Veterans must meet length-of-service requirements
- Service members on active duty must serve for a minimum period
- Reservists and National Guard members may be eligible
- Surviving spouses of deceased veterans may qualify
While the requirements for VA loans are much more relaxed than in a conventional loan, there are still a few important areas to consider:
- Credit score: The VA doesn’t set a minimum credit score, but it requires lenders to review a full financial profile. Each lender will have a different exact minimum score.
- Debt-to-income ratio: The VA also doesn’t specify a number here, but if this figure is over 41 percent, the lender will need to provide proof of the borrower’s ability to repay.
- Lender requirements: Lenders can add overlays, or additional requirements, to VA loan qualifications.
- Down payment: In most cases, you don’t need to make a down payment for a VA loan. If the purchased price of the home is greater than its appraised value, though, you may have to make up this difference.
- VA limits: The maximum VA loan limits the value of a home that can be purchased without a down payment. In 2017, this number has been $424.100, though the exact figure varies by county.
- Property requirements: The VA has strict property requirements, including safety, living conditions and compliance with building codes.
- Fees: There will be a funding fee for VA loans, even though there’s no mortgage insurance requirement. This amount will range from 1.25 percent to 3.3 percent of the total loan amount. This fee is often simply added to the loan amount, rather than being paid up front.
Certificate of Eligibility
To get a VA loan benefit, you have to get a certificate of eligibility from the VA. There are three ways to do this:
- Use your eBenefits account
- Get a VA-approved lender to obtain it for you
- Complete a request for certificate of eligibility form and mail it to a regional loan center
For more on VA loan eligibility, or to find out about any of our other mortgage services, speak to the experts at City Creek Mortgage today.