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VA Loans

A VA loan is a top benefit of military service for eligible veterans, service members and qualifying surviving spouses. It allows you to qualify for a low-cost mortgage when you’re looking to purchase or refinance, even if your credit isn’t perfect.

 

If you currently serve in the military or are a veteran, you’re potentially eligible for a VA loan. This article will explain what you need to know about these special government-backed loans, including rates, qualification requirements and benefits. If you are a disabled veteran, VA loans come with additional benefits, so be sure to read on.

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0% Down

VA loans are one of the few loan options that don’t require a down payment. However, Clarity Home Lending may have specific requirements for a no-down-payment VA loan.

 

It’s important to keep in mind that “no down payment” doesn’t mean “zero cost.” In addition to VA loan closing costs, there are some other fees to be prepared for, even if you’re putting 0% down.

Private Mortgage Insurance

VA loans don’t require PMI. PMI is mortgage insurance on conventional and FHA loans that a lender may require you to pay if you don’t put 20% down. However, VA loans are exempt from PMI. 

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Loan Size

The VA doesn’t limit how much you can borrow, except in the case of impacted entitlement. But when loan limits do apply to a VA loan, they're usually based on conventional loan limits, which as of 2023 sit at a minimum of $726,200 for contiguous U.S. states. Additionally, lenders often use the conventional loan limits as the lower bounds for VA jumbo loans.

Credit Score & DTI

VA loans allow you to qualify with a higher DTI than any mortgage program from one of the major mortgage investors. If you credit score is 620 or better, DTI to qualify can vary based on factors like credit score and down payment amount.

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If your score is at least 580 but less than 620, your mortgage payment can't account for more than 38% of your gross monthly income. Additionally, your total DTI can be no higher than 45%.

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Thank You,  for your service.

We would be honored to serve you.

Additional Benefits For Disabled Veterans

In addition to standard VA loan benefits, disabled veterans also have access to other benefits as well.

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Exemption From Funding Fees

Disabled veterans are exempted from the VA funding fee, so they don’t have to pay the VA funding fee during closing. To qualify for the exemption, you must currently receive some form of disability benefits. Your level of disability is irrelevant.

 

This exemption can save veterans or their surviving spouse thousands of dollars. For example, if you buy a home worth $200,000, you might pay as much as $2,800 – $7,200 in VA funding fees when you close. Disabled veterans can avoid this fee.

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How To Apply For A VA Loan: 6 Steps

Applying for a VA loan is a lot like applying for any other mortgage in many respects. Take these six steps into consideration when applying.

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1. Secure A Certificate Of Eligibility (COE)

You’ll need this to be eligible for your VA loan. You’ll need to provide proof of your military service based on your status.

 

VA-approved lenders, like Rocket Mortgage, can help you get your VA certificate of eligibility quickly with proof of service.

 

Tell your lender you need your certificate of eligibility early in the process so they can help you get it.

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2. Apply For Approval

When buying a home, get preapproved early on. The approval will give you a baseline for determining how much you can afford. In addition, when you make an offer on a house, you’ll find sellers tend to take offers more seriously if a letter of preapproval is attached.

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3. Shop For A House

Finding a house with a VA loan is like finding a house with any other loan option. Whatever property you buy must meet the VA’s Minimum Property Requirements, or MPRs. MPRs ensure the home is safe, structurally sound and sanitary. These requirements vary according to known risks in an area.

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4. Make A Purchase Offer

Once you find a home you like in your price range, put in an offer to buy the home. The seller may accept your offer, reject the offer or counteroffer. Once you and the seller agree on a price, a real estate agent or attorney can help draw up a sales contract.

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5. Undergo VA Appraisal And Underwriting

Underwriters from your lender assess your finances and make sure you qualify for a VA loan. The VA will also require an appraisal before they approve the loan. VA appraisals are stricter than conventional loans. During a VA appraisal, the appraiser will check that the home meets the VA’s MPRs and is sanitary, structurally sound and move-in ready with minimal repairs.

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6. Close On Your New Home

Once the VA appraiser says your new home is safe and sound, it’s time for you to sign on your new home, get your loan and receive the keys to your new property.

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Is A VA Loan Right For You?

A VA loan is an important benefit earned by our military. If you qualify, you can get a great interest rate with no money down, which means homeownership can be more affordable with a VA home loan.

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As a benefit of your service, the Department of Veterans Affairs offers unique resources to help those with military experience purchase a home with a low or zero down payment. VA Loans offer flexible options as either Fixed Rate or Adjustable Rate mortgages.

VA loans are available and provide the buyer the chance to finance 100% of the purchase price of the home. This means no down payment is required. It is important to note that buyers will still need to qualify for the loan. This means that lenders will look at their credit and ability to pay the mortgage. If you are in a troubling financial position, a lender may want to see you pay down debt or save up money before they are willing to give you the loan.

You may also be responsible for closing costs, such as recording the title or paying lawyers to draw up all paperwork. This is negotiable with the seller and something to discuss with your realtor before making an offer on a home.

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The VA Loan process

A VA loan works the same as most other home purchases, with a buyer making a written offer to purchase a home under specific conditions (price, closing cost assistance, other contingencies), and then going through an approval process with a lender. The key difference with a VA loan is that the Department of Veterans Affairs requires that all homes purchased through this program meet certain habitability requirements. They will send out a home inspector and appraiser to make sure that the home is in good working order and is worth what you are paying.

This step may sometimes cause delays, especially if repairs are needed after the inspector looks around. Issues at the home do not necessarily mean that the buyer cannot use the VA loan, just that repairs will need to be done before the home purchase can be completed. The VA recently started offering a VA loan to be used for homes that need renovation on a limited basis.

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How VA Loans Work

  • Purchase your home with as little as 0% down payment.

  • 30-, 25-, 20- and 15-year terms are all available with fixed rates.

  • 5-year adjustable rate mortgage available.

  • Jumbo VA loans available.

  • VA Streamline Refinance with a reduced funding fee and flexible documentation requirements – available for veterans currently in VA loans.

  • No monthly PMI (Private Mortgage Insurance).

  • VA loans are governed by the U.S. Department of Veterans Affairs.

  • Pay your mortgage off at any time without pre-payment penalties.

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