VA Guidelines
In this guide at Gustan Cho Associates, we will be covering the VA Guidelines on VA Loan Requirements. VA loans are the best mortgage loan program in the nation. There is no other mortgage loan program like VA loans. However, not everyone is eligible for VA loans.
The U.S. government created VA loans to reward the brave men and women of our U.S. Armed Services for their valor and service in serving our country during peacetime and wartime. One of the greatest rewards the U.S. government can offer a veteran is the privilege of being eligible for a VA loan. In this guide, we will cover all the important aspects of VA guidelines on VA home loans.
Who Is Eligible For VA Loans
Eligible active and retired members of the United States Military with a valid certificate of eligibility (COE) can qualify for 100% financing VA loans with no down payment required and no mortgage insurance required. Mortgage rates on VA loans are extremely competitive. There is no maximum loan limit on VA loans.
VA Guidelines on VA Home Loans
VA guidelines from the U.S. Department of Veterans Affairs are very lenient with no minimum credit score requirement and no maximum debt-to-income ratio caps on VA loans. In this article, we will cover VA guidelines on VA loans for active duty military, eligible veterans, and spouses of eligible deceased veterans.
About VA Loans
Our Veterans have given a lot to serve the county and deserve any special programs they can get! Veterans have literally earned these benefits! A VA (Veterans Administration) loan is a mortgage loan issued by private lenders. VA loans are backed and partially guaranteed by the Department of Veteran Affairs.
Who Offers VA Home Loans
The loan itself is not issued by the V.A. but insured by them. Lenders must be approved to offer this loan type; they can’t just decide to offer it. Lenders like the guarantee made by the V.A.; it makes them feel secure in offering a loan to someone who might not have the best credit score or might be what is considered a higher risk. This is why they are willing to offer lower interest rates, lower or no down payment, and lower or no closing costs.
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What Are The Current VA Guidelines For VA Home Loans
The VA loan program was part of the Servicemen’s Readjustment Act (AKA GI Bill of Rights) that was created in 1944. It is intended for use by active service members, veterans or their surviving spouses, and current or former National Guard, or reserve members so that they can receive home financing with no down payments (90% of the time).
Is It Hard To Get a VA Mortgage?
Although there is no down payment, there is often a funding fee. More often than not, disabled veterans can be exempt from this fee. Typically, Veterans also do not need Personal Mortgage Insurance (PMI) on the loan as it is already insured by the V.A. There are V.A. home loans designed to help build a home, buy a home, or improve a current home. There are also refinancing options available.
What Are The Eligibility VA Guidelines
Qualifying service members are individuals who are currently serving in the military or veterans who were honorably discharged and have had more than six years of National Guard or reservist service; the service must include 90 consequential days of active service during a war or at least 181 consecutive days of active service during peace, or be a surviving spouse of a service member killed in the line of active duty. To qualify for a V.A. loan, you will need a VA COE (V.A. Certificate of Eligibility), meet the lender’s standards for credit and income, and live in the home you are buying.
What Are Lender Overlays on VA Loans
A lending overlay is a lending requirement that is in addition to what is required by the V.A. Overlays are lending requirements that are above and beyond those of VA Guidelines. This is because lenders are not required to use only the guidelines set out by the Veterans Administration. These are pretty common, but that does not mean that you can’t find a lender with little to no overlays.
Veterans Administration Certificate of Elibibility (COE)
All Veterans who wish to apply for a V.A. loan will need to apply for their Veterans Certificate of Eligibility. You can request a COE through your lender (lenders will often assist in this process) or via the mail. If you choose to request through the mail, you will need to download the VA Form 26-1880. You will also need to request form D.D. Form 214, which is a Certificate of Release or Discharge from active duty.
Who is Eligible For VA Loans?
To qualify for VA loans, you need to meet the minimum VA guidelines of the Veterans Administration. The following people are eligible for VA Home Loans, as per the certain criteria set by the VA Administration on VA guidelines:
- a person who has served in active-duty capacity for 90 consecutive days during wartime.
- for at least 181 peacetime days, you must have served on active duty
- Served in the National Guard or Reserves for 6 years.
- No dishonorable discharge
- Your spouse passed away during active duty
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Discharged Members Of The U.S. Armed Services
Veterans who served in the National Guard need to supply NGB-22. This form proves that you served, and without it, you can’t prove your service. If a military member is unsure what form they need to supply, you can reach out to Veterans Affairs or ask your lender.
VA Guidelines on Surviving Spouse For VA Loans
Families of active duty service members are eligible for V.A. Loans. For surviving spouses, the requirements are:
- Your spouse died in the line of service or from a service-related disability/injury/condition
- Your spouse was MIA or a POW for at least 90 days
- Your spouse had a service-related disability and was eligible for disability compensation at the time of death.
If the above conditions are met and you are eligible for the loan, you will need to complete the following:
- Apply for the VA Certificate of Eligibility (COE).
- You can apply online, through the mail, or through your VA-approved private lender.
- Satisfy the lender’s requirements, including a minimum credit score of 620, a debt-to-income ratio of less than 40%, and a fair credit record.
- Pass the MPRs defined by the V.A.
How To Obtain the VA Certificate of Eligibility
Loan officers can assist you with obtaining your Certificate of Eligibility. The loan officer enters the borrower’s name and Social Security Number (SSN). If nothing comes back about the borrower, a new COE must be ordered. If this all sounds confusing and complicated, it’s not. Many lending institutions that offer VA loans are fluent in navigating this electronic system. If you have misplaced or lost your DD 214 form, you can get a replacement copy.
VA Guidelines on VA Loans After Foreclosure
If homeowners default and foreclose their homes with a V.A. loan, the V.A. will partially cover the loss the lender sustained due to the default. Due to the government guarantee from the Veterans Administration, the lenders are much more at ease with offering V.A. loans. These loans come with no down payment required, often with 100% financing, no monthly mortgage insurance premium, at competitive rates, and lenient mortgage lending requirements.
V.A. Certificate of Eligibility and Entitlement
Just serving in one of our United States military branches does not automatically qualify them to be eligible for V.A. Loans. Only active and retired veterans need to have a V.A. Certificate Of Eligibility (COE) to qualify for V.A. Mortgages. Eligibility status is stated on the Veteran’s Discharge Paperwork (DD214).
V.A. Loan Requirements on Credit Scores
There are no credit score requirements nor debt-to-income ratio caps on V.A. loans. Even though the V.A. does not have credit score requirements, the lender that is supplying the loan will. Generally, lenders look for a credit score of 620 and higher. It is important to look for a lender that will work with a lower score if needed. There are low competitive rates, limited closing costs, and no need for Private Mortgage Insurance (because the loan is already insured by the VA).
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Pre-Qualifying and Pre-Approval on VA Loans
The mortgage qualification and pre-approval process is the most important step of the mortgage process. You should get pre-qualified, although not required. In order to get pre-qualified, you should look for a lender that offers V.A. loans and find out how much you can afford. This is decided based on your income, credit, and other financial aspects. Getting pre-qualified also helps to give the buyer a heads up about any issues that need to be worked out such as issues with your credit or debt to income (DTI) ratio.
How To Get Pre-Approved For a VA Loan
The next step is to get pre-approval. You will need to supply supporting documents such as pay stubs, W2s, and other financial documents to figure out how much loan you can afford. This is a huge step in the home-buying process and makes it a much smoother ride when you find the home you want to purchase.
Last Minute Mortgage Denial on a VA Loan
One of the main reasons for a mortgage loan denial is that the borrower was not aware of what they qualified for or what issues needed to be worked on prior to attempting to get the approval. If you prepare and take the necessary steps prior, it can really speed things up and minimize bumps in the road.
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How To Choose The Best Lender With No Overlays on VA Loans
If you are a veteran or a surviving spouse of a veteran looking to buy a home, take advantage of the programs you have earned. The team at Gustan Cho Associates are mortgage brokers licensed in 48 states with no lender overlays on VA loans.
We have a national reputation for being able to do VA loans other mortgage lenders cannot do. Most of our mortgage loan originators are experts in originating and funding VA loans with credit scores down to 500 credit scores.
VA Loans For Bad Credit
We can help borrowers qualify for VA loans during a Chapter 13 Bankruptcy repayment plan without the Chapter 13 being discharged. If you need to qualify for a VA loan with a lender with no lender overlays on VA loans, please contact us at 262-716-8151 or text us for a faster response. O
r email us at gcho@gustancho.com. The team at Gustan Cho Associatesc. is available 7 days a week, on evenings, weekends, and holidays.
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