Is a VA Home Loan Right For Me?
A VA home loan is an attractive option if you are an active military member, veteran, reservist, or surviving spouse interested in purchasing a house with little or no money down.
The ability to borrow up to 100% of the purchase price is a significant benefit. Not having to save up for a large deposit can help you get into a home quickly.
Other benefits include:
- Lower interest rates and closing costs
- A federal government guarantee
- No mortgage insurance (it is not required with a VA home loan)
If eligible, and you qualify for a VA loan, you can purchase a detached home, condominium, manufactured house, or multi-unit home. The one requirement is that the home must be your primary residence, and you cannot rent it out (either short or long term).
How Do I Find Out If I’m Eligible?
Before you can apply for a loan, you need to know if your service makes you eligible.
Eligibility is based on your military service history and duty status, and the loans are offered to both active duty and retired service members, as well as National Guard and Reserve members.
You can check your eligibility on the U.S. Department of Veterans Affairs website.
I’m Eligible. How Do I Apply for the Loan?
Applying for a VA loan is relatively simple.
First, the funding does not come from the U.S. Department of Veterans Affairs but instead from a lender, such as a bank. Veterans Affairs simply sets the guidelines and requirements for the lenders who provide the loans.
The lender you choose will look at the following factors when reviewing your application:
Your Credit Score
We’ll get right to it. The minimum credit score you will need for many lenders is 620, although the general range across all lenders is between 580 and 660.
The better your credit score, the better the interest rates and terms you qualify for, so it’s a good idea to review your credit before applying.
To raise your score quickly, you can dispute credit report errors, request higher credit limits (to improve your credit utilization), and make extra payments to pay down credit cards and loans.
If you have poor credit, there may still be options available to you. Check with a home mortgage expert.
Your Employment History and Income
You need to show that you have a job and that you receive a regular paycheck. Be prepared to provide recent pay stubs, W-2 wage statements going back two years, and recent tax returns if you had additional income.
If you recently started a new job and are concerned about the lack of history, don’t worry. Lenders typically will ask for documentation from your previous job.
Your Assets
Assets include cash on hand, bank accounts, and money market accounts, among others. The rule of thumb is that if you have an account that you can pull cash out of, it is an asset.
Lenders will request documentation such as bank statements to prove the value of your assets.
If a VA home loan sounds right for you, call UW Funding at (619) 858-4784. We’re happy to answer your questions and help you get started.