The dedicated men and women who proudly serve in the U.S. military are entitled to a wide range of benefits available to them. The primary option available within these benefits is the VA Loan Program. This is an alternative mortgage option to traditional lending options which provides an incredible advantage to active duty and retired military men and women as well as their families.
This program allows the purchase or refinance of a loan for qualifying veterans or active duty personnel with absolutely zero down, no private mortgage insurance (PMI), very low rates and relaxed credit guidelines.
USAVA offers you an incredible opportunity to purchase your dream home with programs designed specifically to make purchasing a new home or refinancing an existing VA Loan affordable and easy! Learn more about your eligibly for these programs in the sections below.
A new Certificate of Eligibility (COE) is not required. You may take your Certificate of Eligibility to show the prior use of your entitlement, or your lender may use our e-mail confirmation procedure in lieu of a certificate of eligibility.
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location.
The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to four times a Veteran’s available entitlement without a down payment, provided the Veteran’s income and credit qualified and the property appraises for the asking price.
An IRRRL can only be made to refinance a property on which you have already used your VA loan eligibility. It must be a VA to VA refinance, and it will reuse the entitlement you originally used.
Those looking to purchase a new home are not required to reach an income threshold to take advantage of the VA Loan Program. Be aware however that borrowers are expected to have a reliable source of income that will cover mortgage payments.
The VA requires that borrowers have a reasonable ratio of income that goes towards a mortgage payment so that they are not at risk for foreclosure. This means that you typically do not want more than 40% of your income to go towards a mortgage payment to become a low risk borrower. The additional amount of your budget covers typical expenses that every household requires.
By enforcing residual income requirements, the VA increases the chances of its borrowers earning sufficient income to meet all financial obligations, and also ensures borrowers have a cushion in the event of an emergency.
When working with a VA Loan Specialist at USAVA, we will help you determine what your individual income and budget thresholds give you in buying power for your new home. Our primary goal is to provide you with options that will give you the very best lending scenario that won’t tax your financial situation.
Finally, a veteran applying for a VA Loan must not have been discharged under dishonorable conditions.
Generally, all Veterans using the VA Home Loan Guaranty benefit must pay a funding fee. This reduces the loan’s cost to taxpayers considering that a VA loan requires no down payment and has no monthly mortgage insurance. The funding fee is a percentage of the loan amount which varies based on the type of loan and your military category, if you are a first-time or subsequent loan user, and whether you make a down payment. You have the option to finance the VA funding fee or pay it in cash, but the funding fee must be paid at closing time. You do not have to pay the fee if you are a:
The funding fee for second time users who do not make a down payment is slightly higher. Also, National Guard and Reserve Veterans pay a slightly higher funding fee percentage. See Loan Fees for more information about loan costs. Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you money in interest over the life of the loan, you may see a very large increase in your monthly payment if the reduction in the interest rate is not at least one percent (two percent is better). Beware: It could be a bigger increase than you can afford.
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