Q&A with the Top VA Loan Team

Our UMortgage Veteran's Alliance team is stacked with the #1 VA Loan originator, service academy grads and veterans driven to provide the best advice and service to other veterans. This Q&A shares some commonly asked questions to better equip veterans and those working with veterans. Let us know if we can help.

1.?????? Why are VA Loans so powerful?

Homeowners have an average of 40X more net worth than renters. The VA Loan can help veterans become homeowners with no down payment—there is nothing like it. It also has other advantages, like no mortgage insurance (required for FHA or conventional financing above 80% loan to value), more flexible underwriting standards and lower rates. These benefits are possible because the federal government is guaranteeing 25% of the loan, making it lower risk for lenders. VA loans are also assumable and have streamlined refinance options. I’ve personally used them several times to help grow my own net worth. It's one of our greatest benefits.

2.?????? Can I use the VA loan for investment properties?

The veteran must intend to occupy the property within 60 days of closing, as a primary residence. The veteran can, however, rent out part of the property or other units to generate additional income and cashflow. You can buy properties up to 4 units + one commercial space with one VA entitlement. This is sometimes referred to as “house hacking”.

3.?????? Can we refinance our VA Loan if rates drop?

VA loans have a great refinance program called the Interest Rate Reduction Refinancing Loan (IRRRL). ?If rates have dropped by at least a .5%, you’ve had the loan for at least 6 months and you can recoup the refinancing costs within 36 months, you should be eligible for a streamlined refinance. These have reduced funding fees of .5% and normally no new income, credit or appraisal requirements. You do not need to be occupying the property as your primary residence at the time of refinancing.

If you’ve had a VA loan at least 6 months and rates have dropped, you will likely get bombarded by solicitations to refinance. Look at these offers carefully because there can be extra fees imbedded in these offers. Just because you can refinance, it doesn’t mean you should. If you’re not going to be in the property for long or the recoupment period is long, it could be better to wait. We’re happy to look at this for you.

4.?????? Is there a loan size limit for a VA Loan?

If you don’t have another VA loan currently, there is no loan limit. Some lenders might have caps, but we’ve seen VA loans over $2 million for people with qualifying income. If you have an existing VA Loan see #10.

5.?????? Can I buy with no $ out of pocket?

You are able to roll the VA funding fee into the loan and can get seller concessions of up to 4% + VA allowable closing costs and points appropriate to the market. So, it’s possible to negotiate a purchase for no $ out of pocket. We recommend planning to have at least 3%-4% of the loan amount to cover closing costs depending on the market conditions.

6.?????? What is the VA Funding Fee and How Much is It?

The VA funding fee is paid by the borrower on each loan to help fund the VA loan guaranty program that allows for loans with lower rates, and no down payments or monthly mortgage insurance. The VA Funding fee can be paid at closing or rolled into the overall loan amount. The VA funding fee can be waived if you are receiving VA compensation for a service-connected disability or are Purple Heart recipient on active duty. The funding fee varies with the down payment size and subsequent use. A VA loan specialist can help look at options, but the fees are shared below:

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7.?????? Who is eligible for the VA Loan? ?

If you served for at least 90 days in wartime (August 1990 to Present) or 181 days in peacetime you’re eligible. Members of the Reserve or National Guard are also eligible upon completion of 6 years of service and 16 points. If you were discharged for-service connected disability you are also eligible. Others with service in other organizations and surviving spouses could also be eligible. We can help look at these cases and additional details are here: https://www.va.gov/housing-assistance/home-loans/eligibility/. ?The Veteran's character of discharge or service must be under other than dishonorable conditions (e.g., honorable, under honorable conditions, general)

8.?????? How can I confirm my eligibility?

Any VA approved lender can pull your Certificate of Eligibility for you. We’re happy to do that for you. This is required to pre-approve you for a VA Loan. Or you can also request if from the VA at: https://www.va.gov/housing-assistance/home-loans/request-coe-form-26-1880/introduction

9.?????? Are there minimum credit requirements?

The VA doesn’t establish minimum credit requirements. Different lenders have different minimum credit requirements and lower credit scores can impact your interest rates. Working with a Mortgage Broker or Loan Officer that can work across several lenders can help you find a lender with the best rate and product for your situation.

10.?????? ?What is my VA Loan limit if I have an existing VA Loan?

If you have one or more existing VA loans, you will be limited for no down payment loans by your new county loan limit and your remaining entitlement. In these cases, you take the original VA loan amount and subtract it from the county loan limit. ?For example, if the new property’s county loan limit is $766,550 and you have an existing VA loan with an original amount of $300,000, you can get another VA loan for $466,550 with no down payment. ?You can still borrow amounts larger than this, but you will have to put 25% down of the amount exceeding your entitlement. For 2024, the county loan limit in most of the United States is $766,550 for 1-unit homes. $981,500 for 2-unit homes, $1,186,350 for 3-unit homes and $1,474,400 for 4-unit homes. Higher priced markets can get up to $1,149,825 for a 1 unit-home. You can check your county here: https://www.fhfa.gov/DataTools/Tools/Pages/Conforming-Loan-Limit-Map.aspx

11.?????? How many times can I use my VA entitlement?

If the home(s) are sold, there is no limit. You can use your available entitlement as many times as you would like. ?

12.?????? How many VA loans can I have at one time?

There is no limit unless your entitlement is maxed out (see question #10.) The county loan limits have been rising, so it’s possible that you might have remaining entitlement even if you have multiple existing VA loans.

13.?????? What do you recommend for couples with dual entitlements?????

We normally recommend that you pick one spouse's entitlement to use. This will allow you to use the other entitlement without any purchase cap. This is of course subject to your unique circumstances.