8 Things To Know About Veteran and Active Duty Home Loans

If you are currently on active duty or a veteran who previously served in any military branch, you may be eligible for a VA home loan. VA home loans are funded by mortgage companies to purchase, refinance and renovate a home, but backed by the US Department of Veteran Affairs. If you or someone you know would like to apply for a VA home loan, check out this list of things you need to know first.

1. How do I know if I’m eligible for a VA home loan? Active duty, veterans, reservists, National Guard, and spouses of military members who have died while on active orders or due to service-connected disabilities are eligible to apply for VA home loans. Active duty members usually qualify after six months of service or after 181 days of service if they are deployed before six months. Reservists are usually eligible for VA benefits after 90 days. Though it isn’t needed to start the mortgage process, borrowers will need the Certificate of Eligibility to complete the VA home loan process. A Certainty Home Loans mortgage professional can help home loan applicants to obtain this certificate.

2. Is there a minimum credit score to be eligible for a VA home loan?
The VA does not require a minimum credit score for a VA home loan, but mortgage lenders typically have their own internal requirements. At Certainty Home Loans we require a credit score of 580 or higher. Generally, borrowers are required to show sufficient income and shouldn’t have outstanding debt, but these guidelines are more flexible for VA loans.

3. What type of properties are eligible for VA financing?
VA home loans are only available for primary residences and cannot be used to purchase a vacation home or an investment property.

4. What is the limit I can borrow with a VA home loan?
Though the limit varies by county, effective January 1, 2018, the loan amount a qualified veteran with full entitlement may be able to borrow without making a down payment on a one-unit home is $453,100. In high-cost areas in the U.S., the amount can go as high as $679,650. See what the loan limit is for the county where you want to finance a home >

5. What is the minimum down payment on a VA home loan?
Most veteran and active duty personnel are not required to make a down payment with a VA home loan. In addition, the seller or builder is allowed to pay a portion of the closing costs, which can substantially reduce the amount of money required to close on a home purchase.

6. Do I need to pay mortgage insurance on a VA home loan if my down payment is below 20%?
Many home loan programs require a borrower to pay private mortgage insurance (PMI) if they are unable to put down 20% to ensure the mortgage lender is paid if the borrower is unable to make their payments. However, VA home loans are guaranteed by the U.S. government, so military borrowers are not required to have private mortgage insurance.

7. What fees are associated with the VA home loan program?
VA Home Loan program charges an up-front VA Funding Fee as required by law, which can range from 1.25% to 3.3% depending upon the type of service, the down payment amount, and whether this is the first time you’ve used your VA mortgage loan entitlement. The VA Funding Fee can be financed by being added to the loan amount, as long as the amount being financed is under the VA loan limit.

Disabled veterans who are receiving compensation for a service-connected disability are exempt from the VA Funding Fee. Veterans who are eligible for disability compensation, but are receiving retirement or active duty pay instead, are also exempt from the fee.

8. Can I get more than one VA home loan?
The VA home loan benefit can be used repeatedly and does not expire. After earning eligibility for a VA home loan, it never goes away. A borrower must first pay off their VA loan in full before they can apply for another loan, which can be done by selling their home first, then applying for a VA home loan to purchase another home. Keep in mind that the VA Funding Fee for subsequent VA home loans will be higher, but it could be a better option than other loan programs for buyers who cannot manage a 20% down payment. Also, eligible veterans and service members can receive one-time restoration when they pay off their loan but keep their home.

Learn more about the VA Home Loans offered by Certainty Home Loans > 
- Nov 05, 2018