There is a lot mentioned in the media lately that has made it seem as though it is very difficult to qualify for a home loan. Many people think they won't be eligible. But, truth be told, many potential borrowers can qualify for home loans but just have been led to think otherwise.
Part One in this series of articles detailed the guidelines for conventional fixed rate loan products. This one focuses on VA Home Loans available to Veterans and Active Duty Military. These loans are available as fixed rate or adjustable rate mortgages.
Credit scores down to 600 are allowed for VA purchases and refinances on loans $417,000 or less. A score of 640 and above are required for loans over $417,000. All VA home loans are for primary homes. Non-veterans are not eligible borrowers unless they are the spouse of the veteran.
The VA loan program guidelines call for a 41% total debt to income ratio. No down payment is required for VA home purchases and the seller can pay all closing costs.
There is an upfront funding fee for regular military, reserves and National Guard. The funding fee can be added to the loan amount. Disabled Veterans with at least 10% disability are exempt from the upfront funding fee.
Veterans can borrow up to 100% of their home's value in a refinance to pay off mortgages. They can borrow up to 95% of their home's value if they want additional cash out over and above the mortgage pay off and have a credit score of 640 or higher; 90% if their score is 600-639.
Loan terms available are as follows: 30 year fixed, 15 year fixed, 3/1 ARM and 5/1 ARM.
Next in this series; USDA Guaranteed Rural Housing Home Loans.
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