Va Loan Eligibility Requirements
Since VA mortgages are military loans, you might qualify if youre a vet or active-duty service member. But serving in the Armed Forces isnt an automatic approval.
To get a VA loan, you must meet one of the following military service requirements:
- Served 90 consecutive days of active service during wartime
- Served 181 days of active service during peacetime
- Served more than six years with the National Guard or Reserves
- Youre the surviving spouse of a service member who died in the line of duty or from a service-related disability
If you meet the qualifications, you can obtain a Certificate of Eligibility before applying, which is proof of your eligibility for VA financing.
Your COE also provides information about your VA entitlement.
If you havent used your VA home loan benefit before, you have full entitlement and should be able to borrow without any down payment.
You can request your Certificate of Eligibility through the Department of Veterans Affairs eBenefits portal.
Or, your lender can access the database and obtain one on your behalf, usually in just a few minutes.
If You Have Full Entitlement You Dont Have A Home Loan Limit
Eligible Veterans, service members, and survivors with full entitlement no longer have limits on loans over $144,000. This means you wont have to pay a down payment, and we guarantee to your lender that if you default on a loan thats over $144,000, well pay them up to 25% of the loan amount. You have full entitlement if you meet any of these requirements.
At least one of these must be true:
- Youve never used your home loan benefit, or
- Youve paid a previous VA loan in full and sold the property , or
- Youve used your home loan benefit, but had a foreclosure or compromise claim and repaid us in full
Note: You may have heard the terms additional entitlement, bonus entitlement, or tier 2 entitlement. We use these terms when we communicate with lenders about VA-backed loans over $144,000. You wont need to use these terms when applying for a loan.
It depends. If you apply and are eligible for a VA-backed home loan, youll receive a Certificate of Eligibility . This is the document that tells private lenders that you have VA home loan eligibility and entitlement.
But your lender will still need to approve you for a loan. The lender will determine the size of loan you can afford based on your:
We dont require a minimum credit score, but some lenders may have different credit score requirements. Be sure to contact more than one lender to compare.
Getting Preapproved Can Tell You Your Home Buying Budget
One of the easiest ways to find your price range is to get a preapproval from a mortgage lender.
Preapproval is kind of like a dress rehearsal for your actual mortgage application. A lender will assess your financial situation as shown by your annual salary, existing debt load, credit score, and down payment size without making you go through the full loan application.
This can tell you whether youre qualified for a mortgage and how much home you might be able to afford.
You could also learn whether you can afford a 15year loan term or whether you should stick with a 30year mortgage. And, a preapproval can show whether youd be better off with an FHA loan or a conventional loan.
Finally, your preapproval shows you the added monthly costs of homeownership such as home insurance, real estate taxes, HOA fees, and mortgage insurance if necessary.
What If I Want To Buy A House Thats Above The Maximum Va Loan In My County
If youve fallen in love with a house that tops the maximum in your area, dont despair. When you look up the VA loan limits in your county, the number you see wont tell you the maximum value of the home you can get with a VA loan. Instead, it tells you the limit of what you can get if you put $0 down.
If you have some money for a down payment, though, these limits might not apply to you. Got some money saved and want to buy a house thats over the VA loan limits? What you need is a jumbo loan.
Va Funding Fee: How Much You’ll Pay
The VA loan calculator automatically factors in your VA funding fee. The fee is a percentage of the loan amount and varies according to the amount of your down payment and whether this is your first VA mortgage. If you’ve had a VA loan before, then the next loan is considered “subsequent use.”
Fees for a first-time VA purchase loan are 2.3% with a zero to 4.9% down payment, 1.65% with a down payment of 5% to 9.9%, and 1.4% with a down payment of 10% or more.
Funding feefor first use
Funding feefor subsequent use
» MORE: Learn about the VA funding fee
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How Much Mortgage Can I Qualify For
Lenders have apre-qualification processthat takes your finances into account to determine how much they are willing to lend you. Once the lender has completed a preliminary review, they generally provide a pre-qualification letter that states how much mortgage you qualify for. Get pre-qualified by a lender toconfirm your affordability.
Why Va Loan Limits Dont Restrict How Much You Can Borrow
The Blue Water Navy Vietnam Veterans Act of 2019 eliminated loan limits for VA loans in order to give military veterans more buying power regardless of home prices. The new law also helps military borrowers avoid jumbo loans, which often require higher down payments and more stringent approval guidelines.
The Advantages Of Paying 20% Down
- Improves your chances of loan approval: Paying 20% down lowers risk for lenders. A larger down payment also makes you look like a more financially responsible consumer. This gives you better chances of qualifying for a mortgage.
- Helps lower your interest rate: Paying 20% down decreases your loan-to-value ratio to 80%. LTV is an indicator which measures your loan amount against the value of the secured property. With a lower LTV ratio, you can obtain a lower interest rate for your mortgage. This will help you gain interest savings over the life of your loan.
- Reduces your monthly payment: A large down payment also significantly decreases your monthly mortgage payments. Though you spend more now, having lower monthly payments will make your budget more manageable. This gives you room to save extra money for emergency funds, retirement savings, or other worthwhile investments.
- Helps build home equity faster: Paying 20% down means paying off a larger portion of your loan. This allows you to pay off your mortgage sooner. If you plan to make extra payments on your mortgage, having 20% equity will help speed up this process, allowing you to cut a few years off your loan term.
- Eliminates private mortgage insurance : As mentioned earlier, PMI is an added cost on a conventional loan if you pay less than 20% on your mortgage. Consider paying 20% down to avoid this extra fee.
Know the Closing Costs
Pay Down Some Of Your Existing Debt
The minimum payment on your credit accounts determines your debttoincome ratio. By paying down your credit card debt or eliminating a car payment, you can qualify for a bigger home loan.
For example, in the scenario above, reducing your monthly obligations by $200 could increase your maximum price from $234,000 to $270,600.
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Try A 35%down Fha Loan
FHAinsured loans allow a 3.5% down payment as long as the applicant has a FICO score of 580 or higher. Those with FICOs between 500 and 579 must put 10% down.
FHA mortgage insurance can make these loans more expensive. They require both an upfront premium and a monthly addition to your loan payment.
Still, FHA allows for much higher debttoincome ratios compared to conventional loans. Sometimes, you can use up to 50% of your beforetax income or more toward your FHA loan payment.
Plus, you could always refinance out of the FHA loan later to eliminate these mortgage insurance fees.
Who Is This Calculator For
This calculator is most useful if you:
- Are a new potential homeowner needing to know your budget constraints
- Have decided on a new home but want to ensure you can afford it
- Are looking to plan and budget for the future
Once you’re entered your information and obtained your results, you can use the Get FREE Quote box at right to request personalized rate quotes tailored to you from mortgage lenders. This will give you a better idea of what interest rate to expect and help gage your ability to qualify for a mortgage.
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Va Loan Limits For 2022
Editorial Note: The content of this article is based on the authors opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.
VA loan limits dont apply to many military borrowers with full VA entitlement. For those who have remaining entitlement, though, the conforming loan limit in 2022 will apply in most parts of the United States.
Why You Can Trust Bankrate
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. Weve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next.
Bankrate follows a strict editorial policy, so you can trust that were putting your interests first. All of our content is authored by highly qualified professionals and edited by subject matter experts, who ensure everything we publish is objective, accurate and trustworthy.
Our mortgage reporters and editors focus on the points consumers care about most the latest rates, the best lenders, navigating the homebuying process, refinancing your mortgage and more so you can feel confident when you make decisions as a homebuyer and a homeowner.
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How Many Times Can You Use A Va Loan
If youve used a VA loan to purchase a home in the past, you know what great benefits they have: low interest rates, no mortgage insurance, and, perhaps most importantly, no down payment. Local and state authorities often even offer property tax exemptions to qualifying veterans.
If youre planning to buy a new home soon and youve already used a VA loan for a previous home purchase, you might be wondering if you can take out another VA loan. Is there a limit on how many times you can use a VA loan?
Is There A Minimum Credit Score For A Va Loan
It sounds weird, but the VA doesnt actually act as the lender for VA loans. Instead, they back the loans that conventional lenders like banks and credit unions supply to veterans. So although the VA itself doesnt have minimum credit requirements for a VA loan, the lender you work with on financing your home likely will have a minimum credit score in mind. Usually this hovers around the 620 markconsiderably lower than with a conventional loan.
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Can A Spouse Apply For A Va Loan
Yes, surviving spouses may be eligible for a VA loan. Here are some eligibility cases for spouses, according to the VA website:
- A spouse, who has not remarried, of a veteran who died in service or from a service-related disability
- A spouse of a prisoner of war or service member missing in action
- A surviving spouse of a veteran, who is receiving compensation for a non-service-related death.
- A surviving spouse who remarried at age 57 or later, on or after December 16, 2003.
- In some cases, a surviving spouse of a totally disabled veteran whose death was not related to the disability.
Whats This Full Entitlement Business I Keep Hearing About
Full entitlement refers to the maximum possible amount of VA loan eligibility for a veteran or surviving spouse. The limits we publish at SmartAsset are the VA loan limits for applicants with full entitlement.
If you already have a VA loan, youve eaten into your entitlement. You might still have remaining entitlement that you could apply to another VA loan, though. In that case, a lender would likely approve you for a loan equal to four times the value of your remaining entitlement.
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How To Use Nerdwallet’s Va Mortgage Calculator
Enter the price you expect to pay for a home and your down payment. VA loans typically don’t require a down payment, but paying a chunk of money upfront will lower your monthly mortgage payment and make you a more competitive buyer in a hot real estate market.
Enter an estimated interest rate. Unsure? Check current VA mortgage rates to see what lenders are offering.
Choose a loan term of 15 or 30 years. You’ll pay less interest over the life of the loan with a 15-year term. Your monthly payment will be lower with a 30-year term because the repayment of the loan is stretched over a longer period.
Select whether this is your first VA mortgage. Your answer will affect the amount of your VA funding fee, a one-time charge most borrowers must pay.
Check the results. The “total monthly cost” estimates your monthly VA mortgage payment, including estimated costs for property taxes and home insurance. The “total cost” is how much you’ll pay over the life of the loan, including the VA funding fee.
For more detail, select the “Monthly” or “Total” box under “Breakdown of costs.” Some VA borrowers roll their funding fee into the total loan amount. If thats your plan, take the funding fee amount, found under the “Total cost breakdown,” and add it to the amount you expect to spend on a home under “Mortgage details.” That will adjust your monthly payment to include the financed VA funding fee.
When Do Consumers Choose An Arm
Adjustable-rate mortgages , on the other hand, have interest rates that change depending on market conditions. ARMs usually start with a low introductory rate or teaser period, after which the rate changes annually for the remaining term.
ARMs come in 30-year terms that can be taken as a straight adjustable-rate mortgage with rates that change annually right after the first year. However, borrowers usually take them as a hybrid ARM, which come in 3/1, 5/1, 7/1, and 10/1 terms. For example, if you get a 5/1 ARM, your rate remains fixed for the first 5 years of the loan. After the 5-year introductory period, your rate adjusts every year for the rest of the payment term.
When does taking an ARM make sense? ARMs are usually chosen by consumers who plan to sell their house in a few years or refinance their loan. If you need to move every couple of years because of your career, this type of loan might work for you. ARMs usually have a low introductory rate which allows you to make affordable monthly payments, at least during the teaser period. Before this period ends, you can sell your home, allowing you to avoid higher monthly payments once market rates start to increase.
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How To Get A Second Va Loan
If you have an existing VA loan, you can still get another in certain cases. You dont need to have full entitlement to qualify for a second loan in this case, youll have remaining entitlement.
There are plenty of situations in which you may need to get a second VA loan. One common situation is when a service member receives orders to a new station. For whatever reason, they choose not to sell their existing homewhich is financed by a VA loanand also want to purchase another property at their new duty station.
Other situations include when youve:
- Paid off the loan but still own the property
- Had a foreclosure and havent paid back the loan
- Refinanced the home with a non-VA loan
When using your remaining entitlement, the amount you can borrow depends on county loan limits. These limits match those set by the Federal Housing Finance Agency and will vary according to the cost of living in each area. The VA will either cover 25% of the loan limit minus the entitlement already used or 25% of the county limit, whichever is less.
This means if youre in a low cost-of-living area and you wish to purchase an expensive home, you may need to front your down payment to meet that 25% guarantee for your lender.
How Much House Can I Afford With An Fha Loan
With a FHA loan, yourdebt-to-income limitsare typically based on a 31/43 rule of affordability. This means your monthly payments should be no more than 31% of your pre-tax income, and your monthly debts should be less than 43% of your pre-tax income. However, these limits can be higher under certain circumstances.
If you make $3,000 a month , your DTI with an FHA loan should be no more than $1,290 â which means you can afford a house with a monthly payment that is no more than $900 .
FHA loans typically allow for a lower down payment and credit score ifcertain requirementsare met. The lowest down payment is 3.5% for credit scores that are 580 or higher. If your credit score is between 500-579, you may still qualify for an FHA loan with a 10% down payment. Keep in mind that generally, the lower your credit score, the higher your interest rate will be, which may impact how much house you can afford.
FHA loans are restricted to a maximum loan size depending on the location of the property. Additionally, FHA loans require an upfront mortgage insurance premium to be paid as part of closing costs as well as an annual mortgage insurance premium included in your monthly mortgage payment â both of which may impact your affordability.
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