Sep The Ultimate Guide To A Va Loan
In the United States, the average household has more than $130,000 in debt, and the number of people living paycheck-to-paycheck is on the rise. With this kind of financial burden, it can be hard to save up for a down payment, let alone qualify for a VA home loan with traditional underwriting guidelines.
Fortunately, there are many options available to help you purchase your first home! VA home loans work by using your military service as collateral instead of credit scores or a money down payment which means they offer low interest rates and flexible qualifications but how do you find out if you qualify? Read on to learn more about what VA home loans are, who should consider them and where to get started.
Heres the ultimate guide to VA loans and how you can qualify for these benefits.
Va Loan Rates By Credit Score
While it is not necessary for you to have an excellent credit score to qualify for VA loans, you must satisfy the lenders requirements by having a minimum credit score of 620.
VA loan rates depend upon many factors, like market conditions, your credit history, debt-to-income ratio, and credit score.
While some of these factors are out of your hands, you can definitely control your credit score. An applicant with a good credit score will be quoted a lower interest rate than an applicant with a bad or fair credit score, resulting in some major savings.
Heres an estimate of what your monthly payment and APR would look like with different credit scores.
Q: How Do I Get A Certificate Of Eligibility
A: Complete a VA Form 26-1880, Request for a Certificate of Eligibility: You can apply for a Certificate of Eligibility by submitting a completed VA Form 26-1880, Request For A Certificate of Eligibility For Home Loan Benefits, to the Atlanta Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it’s best to provide such evidence.
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Va Loan Entitlement Restoration
You can use your VA loan benefit more than once. Much more than once, in fact.
Veterans and active duty personnel, as well as members of the Selected Reserves are eligible for another loan, at the same low VA loan rates enjoyed by first-time home buyers.
The following guidelines apply depending on whether you are keeping or selling your current home.
Using Your Full Entitlement
If youve got your full entitlement to use, great! This indicates that either youre a first-time VA loan user, or youve fully paid off a previous VA loan. This means you have that full $36,000 entitlement amount. Because theres no limit on how many times you can use your VA loan benefit, each time you pay off a VA loan, that $36,000 is restored.
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How To Calculate Second
When you purchase a home with a VA loan, some or all of your entitlement gets tied up in the mortgage. Because the VA usually guarantees a quarter of the loan amount, the entitlement you utilize is typically equal to 25 percent of the loan amount. For example, on a typical $200,000 loan, you’re typically using $50,000 of entitlement.
Do some simple math , and buyers in most parts of the country would have about $111,800 leftover in their remaining entitlement.
Veterans and military members purchasing in more expensive housing markets typically have more VA loan entitlement. VA loan limits are linked to the maximum entitlement amount, and this figure currently goes as high as $970,800 in costlier markets.
The remaining entitlement amount makes it possible for VA buyers to have more than one VA loan at the same time or purchase after experiencing foreclosure or short sale.
How Do I Find Out If I Have Entitlement Available
Your available entitlement is listed on your VA Certificate of Eligibility , which details your military status, dates of service, and entitlement benefit. Dont worry, we dont expect you to have this handy or to figure out your entitlement level yourself.
You can request your COE through the VAs ebenefits portal. But we suggest making it easy on yourself and asking your lender to request it for you. They can look it up when you apply for your loan, and it takes them just a few minutes. That way, you find out how much entitlement you have and whether you can buy a new home without a down payment.
Best case scenario, you have full entitlement. That allows you to put 0% down and exempts you from local loan limits.
But even if your COE shows partial entitlement or no entitlement available, you may still have options, as youll see in the next section.
For more on calculating your potential remaining entitlement, see our guide on buying an additional home with a VA loan.
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Can I Have Two Va Loans At One Time
Though uncommon, it can be possible to have more than one VA loan home at the same time. The simplest case is if your VA mortgage is already paid in full. You may be able to get one-time permission to restore your entitlement and keep the home as a rental property.
The VA may also allow a one-time exception if you need to buy another home due to specific circumstances. For example, letâs say you receive a permanent change of station order and have to move to a different city.
In this scenario, you may be able to get permission to use your remaining entitlement and buy a new home without having to sell your old home and pay off the loan. However, even if you get the VAâs approval, your lender will still be looking to see if youâre financially able to handle two mortgages at once.
Tip: If you sell your house to a fellow veteran who has enough entitlement, they can assume your VA loan and free up your own entitlement. A non-VA home buyer can also assume your loan, but they must pay off the mortgage before your entitlement can be restored.
How Many Times Can You Use Your Va Loan Benefit
You can use your VA home loan benefit as many times as you want. But, with some rare exceptions, you can only have one VA mortgage at a time.
To reuse your VA home loan benefit, you just need to remain eligible and reinstate your entitlement. But there are some rules with implications for the repeated use of your entitlement. So read on to discover the details.
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Can You Have Two Va Loans At Once
It is possible to have two VA loans at once for two separate primary residences. Having two VA loans at once typically applies to active service members who receive PCS orders.
Rather than sell the home, you could look to rent it out and buy again at the new duty station using your remaining VA loan entitlement.
It can be a confusing subject, and it’s best to talk to an experienced loan officer about the VA’s occupancy requirements and if your unique situation allows you to have two VA loans at the same time.
What Is The Minimum Credit Score To Qualify For A Va Mortgage
There are no minimum credit score requirements to qualify for a VA loan, but your private lender will require you to have a minimum score of 620.
To improve your credit score, implement the following financial habits:
- Try not to max out your credit cards.
- Make sure to clear any existing debts.
- Pay your bills on time.
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Va Home Loan Eligibility Requirements
Depending on the lender, requirements for certain aspects of a VA home loan may vary. There are general VA home loan requirements you should meet to be eligible for this type of loan. There are also documents you will need to submit to apply.
If you meet all requirements and submit all documents, you can expect the process to move seamlessly.
Q: What Is Acceptable Proof Of Military Service
A: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost.If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD214 WILL SUFFICE…..DO NOT SUBMIT AN ORIGINAL DOCUMENT.
If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.
If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.
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How Many Times Can You Get Va Loans
You can get VA loans as many times as you wish. Keep in mind that the rules and requirements may change each time you apply for a new VA home loan. In most instances you can only carry one VA mortgage at a time, so you would probably have to payoff your existing mortgage before qualifying for the next one.
Also, make sure you dont have any unpaid periods of active duty service when applying again. You also must wait at least two years to reapply if your initial application was denied or withdrawn.
Requirements For Other Beneficiaries
Heres a list of documents youll need, depending upon your service type.
- Current/Former Activated National Guard/Reservist DD Form 214
- Current Non-Activated National Guard/Reservist Statement of service
- Discharged National Guard NGB Form 22 and 23.
- Discharged Army Reserve DARP Form FM 249-2E or ARPC Form 606-E
- Discharged Navy Reserve NRPC 1070-124
- Discharged Air Force Reserve AF 526
- Discharged Marine Corps Reserve NAVMC HQ509 or NAVMC 798
- Discharged Coast Guard Reserve CG 4174 or 4175
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What Is A Va Loan
The Department of Veterans Affairs offers veterans, active-duty military, reservists, and their family members no-down payment mortgages guaranteed by the government. There is no down payment requirement, as well as a lower interest rate, flexible guidelines, no private mortgage insurance , and an easy qualification process with these mortgages.
Can A Person Get A Va Loan More Than Once
You can get a VA loan more than once, although you will have to meet certain requirements. For an additional full entitlement loan, you must have paid off your previous VA loan in full and you must no longer own the home. For partial entitlement, you will need to have remaining entitlement and the loan must fall under FHFA county loan limits.
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Types Of Va Loans Griffin Specializes In
VA Purchase Loan
Purchase a home with no down payment and lower interest rates with a VA purchase loan available for current service members and veterans.
VA Cash-Out Refinance
Turn your homes equity into cash by refinancing with a VA cash-out loan. Your original home loan doesnt need to be a VA loan to qualify.
VA Streamline Refinance
Refinance your original VA home loan with a VA streamline refinance loan to lower your interest rate and save money on your mortgage payments.
Va Loan Assumed Entitlement May Or May Not Be Restored
if you sell your house before it is paid off the buyer can assume the VA loan. The buyer may use your entitlement to assume the mortgage. If this happens you can’t get another VA loan until your first one is paid off.
If you sell your house to a veteran they can use their entitlement to get a VA loan, if this is the case you are free to use your VA loan again.
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Why Use A Va Loan
special benefits to service members3.5% in interest monthly20% no down payment.most borrowers simply pay a low, one-time VA fee2.3% and 3.6% exempt from this fee
Key Takeaway Eligible individuals can use a VA loan as many times as they would like, as long as the loan is for a primary residence. There are many benefits to using a VA loan.
Q: Is The Surviving Spouse Of A Deceased Veteran Eligible For The Home Loan Benefit
A: The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make application for the home loan benefit as a surviving spouse, contact our Atlanta Eligibility Center. In addition, a surviving spouse who obtained a VA home loan with the veteran prior to his or her death , may obtain a VA guaranteed interest rate reduction refinance loan. For more information, contact our Atlanta Eligibility Center.
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What Are The Stipulations
Acquiring a second VA loan does come with certain conditions.With most lenders, you must have a renter locked into a lease and a security deposit to offset your first VA loan mortgage payment. While having a renter locked in helps your debt-to-income ratio because it offsets your mortgage payment, unfortunately, any additional rental income cant be used towards qualifying for your second loan. For example, say your monthly mortgage payment is $800, but youre going to charge your renters $1,000. That $200 extra cant be used as additional income to qualify for a second VA loan. Income qualification for secondary properties can vary by lender, so be sure to ask about the necessary underwriting guidelines when applying for a second home.Additionally, youll still need to meet the occupancy requirements of a VA loan, meaning that this new home must be your primary residence. Youll need to occupy your new home before a certain time period passes following your closing.VA loans are arguably the best loan program available. So if youre eligible, be sure you know how to take full advantage. If you have questions about keeping your home and buying again, please feel free to contact a mortgage banker.
Can A Va Loan Be Used For A Second Home
You cannot use a VA loan for second home purchases, but you can use it for a second primary residence. In mortgage lending, the term second home typically refers to a vacation home, like a beach getaway. A VA loan cannot be used to purchase this type of home.
In contrast, a second primary residence is a home where you spend more than six months in a year. To be eligible, you must have enough entitlement and income to qualify for both houses.
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Who Is Eligible For A Va Loan
VA loan eligibility standards differ depending on your status in the military. There are four primary categories that the Department of Veterans Affairs will assess your eligibility from. These categories are active duty, veteran, Military Reserves or National Guard, and military spouse. You can reference the VA loan program eligibility requirements here.
Can I Have Two Va Loans At The Same Time
It’s possible to have more than one VA loan at the same time. To do this, you would need to use your remaining entitlement for the second loan also called second-tier entitlement.
This approach is often used by:
- Service members experiencing a permanent change of station. They may choose to retain their primary residence, often to be rented out. The VA borrower may have enough remaining entitlement to purchase a new home without a down payment at the new duty station.
- Former VA borrowers who lost their homes to foreclosure. Using their second-tier entitlement can allow them to buy a new home and start anew.
Your Certificate of Eligibility will detail how much of your entitlement remains. This is the amount youd be eligible to have guaranteed by the VA on your second loan.
If theres not enough to cover the loan youre looking for, you may be able to qualify by making a down payment . VA loans also do not require mortgage insurance, another way youll save over other loan options.
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