A Quick Guide to VA Loans

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Servicemen and servicewomen in the United States have a great resource in their pocket with VA Loans. Not a lot of people know how to use the VA Loan or what it offers, and sometimes even Realtors have a hard time explaining the benefits to clients.?

The opportunity to get a home loan through a VA Loan is too good not to miss. It helps active service members and veterans receive a mortgage and become homeowners by guaranteeing 25% of the loan with NO DOWN PAYMENT REQUIRED.

There are some minor exceptions and stipulations to this, the major ones of which are described in this article.

Here is a very simple breakdown of the VA Loan so that you can get a basic understanding of what it is, what it offers, and whether or not you may be able to qualify.

What Does the VA Loan Offer?

• Guarantees 25% of loan
• 0% down payment required
• Competitive Interest Rates
• Does not require Private Mortgage Insurance (PMI) like most conventional loans
• Can use a VA Loan as many times as you wish - the benefit doesn’t expire
• Can have more than 1 VA Loan at a time
• No size limit to the VA Loan
• Disabled Veterans (with a service-connected disability) never have to pay the VA Funding Fee that comes with this loan
• As of January 1, 2020 - Veterans and active service members can get 100% financing for anything they qualify for, and for 0% down. They are not limited by county loan limits.?

Who Qualifies for a VA Loan?

• Active Service Members - If completed 90 consecutive days of service without a break in service
• Veterans - Different timeline limits apply based on when you served. See this list on VA.org.
• 2 Unmarried Veterans - Yes, they may qualify
• 1 Veteran and 1 Civilian who are Unmarried - Yes, for a guarantee of 12.5% of the loan
• National Guard & Reserves - Yes, they may qualify
• Honorably Discharged - Yes, they may qualify?
• Dishonorably Discharged - No, they do not qualify

Certificate of Eligibility (COE)

In order to prove you meet the eligibility requirements for a VA Loan, you must obtain a Certificate of Eligibility.?

You can get this from a variety of places, but you can obtain a free one from theVAloan.org, an organization which educates real estate agents on the ins and outs of working with service members and veterans who have been issued a VA Loan.

What Does A VA Loan Cost?

There is only one cost to the VA Loan and that is the VA Funding Fee.?

This is a type of closing cost, and it is due and paid for at closing. It is not unheard of for the fee to be negotiated and paid for by either the buyer or the seller, or split between them.??

The fee can be financed into the loan, but that will require paying interest on the fee.?

VA Funding Fee

• 1st use of a VA Loan — Fee is 2.3% of purchase price
• All consecutive uses of the VA Loan — Fee is 3.6 % of the purchase price

Again, if the veteran applying for the mortgage has a service-related disability, the disabled veteran will never have to pay the VA Funding Fee.

What Type of Property Requirements Are There for A VA Loan?

In general, the VA Loan will insure properties that are Safe, Sanitary, Sound. What does that mean? For example, if the property has a water well, that well has to be tested and deemed sanitary. Another example is that the property in question does not require any huge rehabilitation projects to make it livable.

“Fixer Uppers”, as a result, would be a challenge to insure via a VA Loan.?

Generally a VA Loan is not issued for the purchase of vacant lots.?

Any Other Requirements?

One other major requirement is that the receiver of the loan must move into the property within 60 days, and they must live at the property for at least one year.

It is also important to remember that eligibility for a VA Loan does not automatically qualify someone for a mortgage. That still depends on a qualified mortgage lender’s analysis of the individual’s credit and finances.?

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Speak with your local lender to learn more, or ask me for a good lender referral.

I hope this article has helped you understand the basics of the VA Loan and what it can do for active servicemen and servicewomen and for veterans.?