VA Home Purchase
The VA Home Purchase Program was developed to assist veterans who have served or who are currently serving in the armed forces to purchase homes. VA home loans are an outstanding benefit to the men and women who have served our great nation. Veterans that qualify can purchase a home with no money down, which makes buying a home extremely affordable. In addition, VA loans also offers very flexible underwriting guidelines, no monthly mortgage insurance and very competitive financing options.
Why is the VA Purchase So Great?
The VA Home Purchase Program is one of the most attractive purchase loans due to its low cost as well as flexible underwriting process that allows for compensating factors. For example a high credit score, low debt to income ratio, or even assets can help offset negative factors on your application. A VA lender may even consider other types of payment history like rent or utilities when making a decision on an approval. This common sense type of manual underwriting can make the difference when it comes time to get approved for your VA loan. In addition to this by not having a down payment requirement it will save the veteran literally thousands at closing.
What Are the Advantages of a VA Purchase?
- No down payment
- No mortgage insurance
- Credit scores down to 620
- No prepayment penalty ever
- Up to 50% debt to income ratio
- A VA loan may also be assumable
- Allows for 4% seller paid closing costs
What Are the Requirements?
- Primary residence only
- Minimum credit score 600
- 2 year work history
What About The VA Funding Fee?
The VA funding fee is collected by lenders at closing and is financed into the loan which helps offset the cost to fund the VA program. It’s a requirement on all VA loans except when the veteran has had a service related disability in which case they can be exempt from paying this fee.
- The funding fee for first time use is 2.15% for a veteran of active duty and 2.4% for National Guard or Reservist
- For second or subsequent use the funding fee is 3.3% for a veteran of active duty and 3.3% for National Guard or Reservist
Frequently Asked VA Purchase Questions:
What are the documents I will need?
- Copy of driver’s license
- Copy of social security card
- Two most recent pay stubs
- Two years of W2′s or tax returns
- Copy of your DD Form 214 for discharged veterans
- Statement of service for active military personnel
- Copy of your Certificate of Eligibility (COE)
- Contact information for insurance agent
What Does Having Basic Entitlement of $36,000 Mean?
The $36,000 does not represent the maximum loan amount you can obtain through the VA Home Loan Program. The figure merely provides evidence to your lender that you have full VA entitlement. With this entitlement and underwriter approval, you can obtain a loan in an amount up to $417,000 or more; some high cost counties have even higher limits.
What is a DD form 214?
The DD Form 214 is proof of your military service and issued upon a military service member’s retirement, separation or discharge from active-duty military.
What is a Certificate of Eligibility (COE)?
This is the document issued by the federal government certifying a veteran’s eligibility for a VA mortgage.
How do I obtain my Certificate of Eligibility (COE)?
Ask you lender to obtain your COE on your behalf using the ACE (automated certificate of eligibility) system.
I already have a VA loan can I get another one?
Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use.
Why Does My COE Reflect a Paid-in-Full Loan With No Restoration of Entitlement?
In order for entitlement to be restored, the prior VA loan must be paid in full and the property disposed of. If you no longer own the property, please state as such on your application form 26-1880 and resubmit. Do note that you can obtain a restoration of entitlement without disposing of the property when the loan is paid in full on a one time basis.
What Types of Property Does My COE Cover?
The VA Home Loan program guarantees loans for real property that is to be used by the veteran as a primary residence. The program does not cover vacation homes, vacant land, multiplexes in excess of four units, motor homes, small business loans, or commercial buildings.
Will I have to get an appraisal?
Yes, a new VA loan with require a new appraisal that will be ordered directly through the VA so an independent appraiser can complete the appraisal.