VA home loans offer great benefits for veterans, military members, and qualifying surviving spouses. They typically provide better mortgage and refinance terms than those which are generally available. They are granted by banks and other VA-certified mortgage lenders, with a portion of the loan insured by the Department of Veterans Affairs. This federal backing provides lenders with additional assurance, allowing them to offer better terms like zero down payments, lower loan rates, and more lenient screening requirements. If you are planning to apply for a VA loan, read on to learn about the VA loan requirements to see if you qualify.
VA Loan Requirements
These are some basic requirements for VA home loan applications:
Military Service Records
A VA loan is not available to everyone who has served in the military. Your service record determines whether or not you are eligible for a VA home loan. If you have spent a minimum of 181 days of active military service during peacetime, 90 days of combat duty during wartime, or six years in the National Guard or Reserves, you may be eligible.
Credit Score
You don’t need a minimum credit score to be eligible for a VA loan. However, VA mortgage lenders can impose their own minimum FICO credit score requirements (FICO is the number used to determine one’s credit worth) which are often in the low- to mid-600s.
Debt-to-Income Ratio
Another important prerequisite for VA loans is the DTI (Debt-to-Income) ratio. Again, the actual DTI for loan approval will depend on your personal situation and the lender, but in general, the highest allowed DTI for a VA loan is 45%.
Primary Residence
If you wish to utilize a VA loan to buy a house, it must be your primary residence. This implies that you and your family must plan to stay in the house once you buy it. VA loans are not available for vacation homes or investment properties. Furthermore, the VA has set Minimum Property Requirements (MPRs) that your chosen property must fulfill in order for your application to be accepted.
Down Payment
In most cases, VA loans do not require a minimum down payment. However, if the acquisition price of the house exceeds its appraised value, you may be obligated to pay at least some of the difference. One advantage of making a down payment is that it will most likely minimize the VA funding fee.
Steady Income
To be qualified for a VA loan, your income must be steady and reliable. You must submit your latest pay stubs, your last two years’ tax returns, and details regarding additional sources of income such as child support, alimony, self-employment income, rental income, and so on.
Why Should You Get a VA Loan?
- Better terms
- Lower mortgage rates
- Lower or zero down payments
- A great refinance program that assists buyers in lowering their payments or receiving cash back on their equity
- A higher debt-to-income ratio
- More flexibility in the case of foreclosure or bankruptcy
- No penalties for paying off your loan early
If you’re interested in purchasing a house with a VA loan, our team can help. Contact us today!