The VA Home Loan is a benefit to those who have served or are serving our armed forces and is a truly unique program, for those that are eligible. The VA loan program is for qualified Veterans of the Armed Services and National Guard and also current active duty military personnel. This article will discuss some of the facts, features and benefits of the program, including: no minimum down payment, no maximum loan amount, minimum credit scores and flexible debt guidelines of the program.
On an VA loan, there is no minimum credit score to obtain a loan, but most lenders will require a 580-credit score or higher. As with all loan programs, the higher your credit score, the lower your interest rate will be. However, VA loans have some of the most lenient and forgiving credit score requirements of all home loans.
The VA home loan has no down payment requirement at all for the purchase of a home. Meaning that you can purchase a home with a 0% down payment. The same also applies for a refinance, as you can refinance your existing VA loan, with no equity requirement.
Home Loan Limits:
The base VA loan limit, follows the current conventional loan limit, which is presently $453,100 in Maricopa, Pinal and Pima Counties in Arizona.
Up to $453,100 you can obtain a VA loan without a down payment. If you want to obtain a VA loan above $453,100, then for every dollar above that amount a 25% down payment is required. For example, if you wanted to obtain a VA loan for $553,100, then your down payment required would be $25,000 or 25% of the $100,000 over the $553,100 loan limit.
In this regard, the VA loan program should also not be discounted, as a viable alternative to Jumbo financing, as the down payment requirements will almost always be less, on a VA home loan, then a comparable Jumbo home loan.
VA Funding Fee:
Any veterans that have a VA service connected disability rating are exempt from the VA funding fee always. For Veterans who do not have this rating, then there is a 2.15% VA funding fee added to the base loan amount of the VA loan, the first time they take out a VA loan. Then each subsequent time a Veteran uses the VA loan for a home purchase, the funding fee increases to a 3.3% VA funding fee.
However, with a 5% down payment, the VA funding fee is reduced to 1.5% and with a 10% down payment, the VA funding fee is reduced to 1.25%.
On a VA Irrrl (streamline) refinance loan, there is just a 0.5% VA funding fee, which is also waived with a service connected disability.
Foreclosure, Short Sale and Bankruptcy
To obtain a VA loan, you must wait two years after the completion of a short sale or foreclosure, to obtain a new loan. In addition, there is also a two year waiting period after the discharge of a chapter 7 or 11 bankruptcy to obtain a new home loan.
Debt To Income Ratio:
On a VA loan, the programs basic guide says that your monthly mortgage payments, together with all of your other monthly debt payment, should not exceed 41% of your monthly income. However, with compensating factors, such as a steady job history, assets or good credit, it is not uncommon for higher debt to income ratios to be approved for VA loans, often up to 50% or higher.
These are some of the basics you need to know about the VA home loan program, but of course everyone’s individual situation is unique and it is always best to speak with a licensed lender, such as Strategic Mortgage and explore all available options, for your specific situation.
For more information on current home loan programs and options for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: firstname.lastname@example.org or online at www.strategicmtgaz.com
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