Understanding VA Home Mortgages For Veteran Homebuyers

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In this article, we will cover understanding VA home mortgages for veteran homebuyers. We will cover and discuss the eligibility requirements for active duty and retired veterans. Understanding VA Home Mortgages and the Agency Guidelines is very important because most lenders have lender overlays on VA loans.

What Are Lender Overlays on VA Loans?

All lenders need to meet the minimum agency mortgage guidelines by the Veterans Administration. However, lenders can have higher lending standards called lender overlays on VA loans. Therefore, not all lenders have the same lending requirements on VA loans. This is why Understanding VA Home Mortgages and how overlays work is important. This holds especially true for borrowers with less-than-perfect credit or prior bad credit. Just because you do not qualify for a VA loan with one lender does not mean that you will not qualify with a different lender.

Best VA Mortgage Loans With No Lender Overlays

Gustan Cho Associates is a national mortgage company licensed in multiple states with no lender overlays on VA loans. Over 75% of our borrowers are folks who could not qualify at other lenders due to overlays. Gustan Cho Associates has zero lender overlays on VA loans. We just go off the automated underwriting system (AUS) findings and do not have another layer of lender overlays

Understanding VA Home Mortgages and About VA Loans

VA loans were created and put in place by Congress to reward the men and women of the United States Armed Service for their service in serving in our military. Active and retired members of the U.S. Military with a valid certificate of eligibility (COE) are eligible for a VA loan.

 

How Do VA Loans Work?

VA loans are hands down the best home mortgage program in the Nation. The VA does not originate nor fund loans. Private lenders use their money and/or warehouse lines of credit to originate, process, underwrite, and fund VA loans.

Frequently Asked Questions (FAQs)

1. What is a VA home mortgage?
A VA home mortgage is a loan program the Department of Veterans Affairs provides to assist veterans, active-duty service members, and qualified surviving spouses in buying, building, or improving a home. These loans often come with good terms, such as no down fees and no private mortgage insurance.
2. Who is eligible for a VA home mortgage?
Eligibility for a VA home mortgage is typically extended to:
1. Veterans
2. Active-duty service members
3. Members of the National Guard or Reserves
4. Eligible surviving spouses Eligibility is determined based on the length and type of service and discharge status.
3. What are the benefits of a VA home mortgage?
Key benefits of a VA home mortgage include:
1. No down payment is required in most cases
2. No private mortgage insurance (PMI) required
3. Competitive interest rates
4. Limited closing costs
5. Lenient credit requirements compared to conventional loans
6. The capacity to finance the VA funding fee
4. What is the VA funding fee?
VA funding fee is a single payment made to the Department of Veterans Affairs to cover the expenses of the VA loan program. The fee can be added to the loan total amount and varies based on factors such as the loan amount, type of loan, and whether the borrower has used a VA loan.
5. Can the VA funding fee be waived?
The VA funding fee can be exempted for certain veterans, particularly those receiving VA disability compensation. Surviving spouses of veterans who passed away in service or due to a service-related disability may also be eligible for a waiver.
6. What types of properties can be purchased with a VA home mortgage?
VA home loans can be utilized to buy:
1. Single-family homes
2. Condominiums and townhomes (VA-approved)
3. Manufactured homes and lots
4. Multi-family properties (up to four units) if the veteran wanted to occupy one of the units
5. New construction homes
7. Can I utilize a VA loan more than once?
You can use a VA loan multiple times if you have remaining entitlement and meet the eligibility requirements. Your entitlement can be restored after paying off a previous VA loan or selling the property.
8. How do I apply for a VA home mortgage?
To apply for a VA home mortgage:
1. Get a Certificate of Eligibility from the VA, verifying your loan Eligibility.
2. Choose a VA-approved lender and complete their loan application process.
3. Provide the lender with the necessary documentation, such as your COE, income verification, and credit information.
4. The lender will process your application and guide you through the steps to closing.
9. What credit score is needed for a VA home mortgage?
It does not set a minimum credit score needed, but most lenders prefer a credit score of at least 620. However, some lenders may accept lower scores based on other compensating factors.
10. How does the appraisal process work for a VA home mortgage?
The VA requires an inspection to ensure the property meets minimum property requirements (MPRs) and is safe, structurally sound, and sanitary. A VA-approved appraiser will assess the property and provide a report to the lender. The appraisal helps identify the home’s fair market value and any necessary repairs.
11. What are the occupancy requirements for a VA home mortgage?
The VA requires that the borrower occupies the home as their primary residence. Generally, the borrower must move into the home within a reasonable time after closing, usually within 60 days. Exceptions can be made for certain circumstances, such as deployments.
12. Can a VA home mortgage be used for refinancing?
Yes, the VA offers several refinancing options, including:
1. Interest Rate Reduction Refinance Loan (IRL): Also known as a VA streamline refinance, this option allows veterans to refinance an existing VA loan to a lower interest rate with minimal documentation.
2. Cash-Out Refinance: This option allows veterans to refinance an existing mortgage (VA or non-VA) and take out cash from the home’s equity.