A lot of veterans and active service members have questions regarding VA loans.
So to stop the myths and information about VA loans, allow us to answer some of the most common questions about the loans.
Hopefully you’ll get the information you need to determine whether or not a VA loan is a good decision for you.
What are VA Loans?
VA loans are mortgage loans that are backed by the Department of Veteran Affairs.
They were designed to provide veterans with affordable housing without making a down payment or paying Private Mortgage Insurance (PMI).
Who’s eligible for VA Loans?
In order to be eligible for a VA Loan you must meet one or more of the following criteria:
- At least 91 Days of Wartime Active Duty Service
- You have 6 Years of Reserves or National Guard Service
- You are the spouse of a service member who was killed in action
- You received an honorable discharge
- You have 181 Days of Peacetime Active Duty Service
If I filed for bankruptcy can I still get a VA Loan?
People who have filed for bankruptcy are still eligible for VA loans as long as they meet the service requirements above. Credit is not as big of a factor for getting approved for a VA loan as with conventional loans.
What’s the difference between VA loans and Conventional Loans?
There are several differences between VA loans and Conventional loans. One of the most noticeable differences is that VA loans offer 100% financing which means you don’t have to make a down payment. Conventional Loans will usually require a down payment of around 20%. Due to the fact that VA loans are backed by the Department of Veteran Affairs, it’s usually easier to get approved for them than a conventional loan.
Are there any downsides to VA loans?
VA loans have a great deal of benefits but they aren’t perfect. VA loans have a maximum loan amount. This means that while you can buy a home of any price, the loan will only cover up to a specific amount. VA loans also have specific requirements to qualify for, so they’re not available for all service members. Another disadvantage is that VA loans can’t be used for real estate investing. That is, you cannot use the loans to buy multiple homes and sell them. The loans are only good for your primary residence.
How much money will I get?
The amount of the loan you will get will vary. The maximum amount lenders will give for a VA loan is generally $417,000. The amount you’re approved for will depend on your income, credit, and other factors. There are online VA loan calculators that can help you calculate your loan amount as well as your monthly payments.
Which Lenders offer VA Loans?
All lenders can provide VA loans, but not all of them do. The best way to find out is to consult the lender you are looking into. Do your research on popular lenders who specialize in VA loans.
What information do lenders need in order to be approved for a VA Loan?
VA loans usually require the same information as any other type of home loan. Some common documentation includes:
- Recent pay stubs
- Information about your previous employers
- Any information on other active debts or loans you have out
- Your Certificate of Eligibility
What are the repayment options?
Repayment works just like other loans. You have the option of fixed payments where you make regular payments of principle plus interest or GPM where you start off with small payments and gradually level out towards the 5th or 6th year. The type of repayment plan that you will choose may vary depending on your lender. It’s a good idea to ask your lender about how repayment will work prior to starting the approval process.
If I had a dishonorable discharge, am I eligible for a VA loan?
Unfortunately service members who received a dishonorable discharge are not eligible for VA loans.
Do I have to buy a home that’s already build or can I use my loan to build a new home?
VA loans can be used to build a new home. However, there are usually many stipulations and regulations that will make this a very difficult process. An option you have is to get a conventional loan to start out with and then once the home is built, refinance with a VA loan.
Can I use a VA loan to purchase property in another country?
No. The home being financed must be in the United States. The only stipulations for this are U.S. territories or possessions. This includes Puerto Rico, The Virgin Islands, Guam, American Samoa, and The Northern Marina Islands.
Can you refinance a VA loan?
Absolutely. You have the option of refinancing a VA loan to a VA loan which is called an Interest Rate Reduction Refinancing Loan (IRRRL). This refinancing option allows you to receive up to 100.5% of the loan value. If you already have a conventional loan, you can still refinance with a VA loan. Refinancing may allow you to obtain a lower interest rate, so if you’re looking to save a little money on interest ask your lender about their VA Loan refinancing options.
How can I get more information on VA loans?
You can always consult a VA loan specialist for any information or questions regarding VA loans. VA Loan Specialist can also supply you with a certificate of eligibility if you meet the service requirements for VA loans.
