9 Facts About VA Home Loans Veterans Do Not know
This BLOG On 9 Facts About VA Home Loans Veterans Do Not know Was Written By Quiana Williams Contributing Editor of GCA Mortgage News & Senior Loan Officer of GCA Mortgage Group
VA Loans are the most popular loan program in the United States.
- However, not all home buyers and/or veterans can qualify
- Home Buyers needs to be veterans in one of the branches of the United States Military with a Certificate of Eligibility (COE)
- Over 22 million active servicemen and women and retired veterans live in the United States
- Many retired members of our military do not know facts about VA Home Loans
- Less than 10% of our veterans are utilizing this great benefit by the U.S. Department of Veterans Affairs available to our members of active and retired military
- Reason why such low veterans are taking advantage of VA Loans is due to the facts about VA Home Loans they do not know
There are countless of eligible veterans bypassing taking advantage of the best loan program in this country.
Top Reasons Why Veterans Do Not Utilize VA Home Loans
There are many reasons why veterans do not utilize VA Home Loans.
- Many veterans are paying high rent where their rent payments often are higher than if they were homeowners making their mortgage payments
- Most of those who do not participate and take advantage is due to not knowing the great benefits and facts about VA Home Loans
- Any home buyers think of red tape when they think mortgages and try to avoid even looking into it
- The mortgage process, especially VA mortgages, is not as difficult as it may seem and there is no reason to stress
- We will explain how simple and streamlined the VA home loan process for home buyers on this blog
- Key in simplifying the VA Mortgage Process is by having a direct VA Lender with no overlays
Quiana Williams of Gustan Cho Associates Mortgage Group at USA Mortgage is a direct lender with zero overlays on VA Home Loans. Qualifying for VA Loans is easier than any other loan program. The Department of Veteran Affairs has much more lenient guidelines than HUD, USDA, Fannie Mae, Freddie Mac.
100% Financing With No Down Payment And No Closing Costs
Besides USDA Loans, VA Mortgages is the only other mortgage program in the U.S. that does not require down payment on home purchase.
- All purchase and refinance loan transactions have closing costs
- Closing costs are loan origination and third party charges both home sellers and buyers needs to pay
- However, a loan officer can structure a file where home buyers do not have to pay any closing costs on home purchase
- Most of our borrowers normally do not pay a dime and walk out with the keys on our VA Loan Program
- Department of Veterans Affairs allows 4% sellers concessions by sellers to offer home buyers for closing costs
- If borrowers are short of closing costs with sellers concessions, then lender can offer lender credit in lieu of higher mortgage rates
- FHA Loans require 3.5% down payment and Fannie/Freddie require 3% to 5% down payment on Conventional Loans
- VA Loans do require a one time upfront VA Funding Fee
- However, the VA Funding Fee can be rolled into the balance of the loan
There is no mortgage insurance premium required on VA Loans.
Facts On VA Loans Veterans Do Not Know About Qualification Requirements
VA has the most lenient guidelines out of any loan programs:
Here are some facts on VA Loans compared to FHA Loans:
- Both VA and FHA have two year waiting periods after Chapter 7 Bankruptcy discharged date
- Both VA and FHA allow borrowers to qualify for loans 12 months in a Chapter 13 Bankruptcy Repayment Plan
- Both VA and FHA does not have waiting period requirements after Chapter 13 discharged date
- There is a three year waiting period after housing event (foreclosure, deed in lieu of foreclosure, short sale)
- VA shortens the wait period to two years after housing event
- Both VA and FHA does not require borrowers to pay outstanding collections and charged off accounts
- Deferred student loans that are deferred for 12 or more months are excluded on debt to income calculations on VA Loans
- FHA requires 1.0% of outstanding student loan balance to be used as hypothetical monthly debt
- VA requires on non-deferred student loans, to take 5% of outstanding student loan balance and divide that amount by 12 months and that figure is the hypothetical monthly student loan debt
Costs In Obtaining VA Loans
There is no down payment required on home purchases. All loan programs have closing costs. However, VA allows up to 4% sellers concessions by home sellers to offer buyers. If borrower is short to cover closing costs with sellers concessions, then lender can offer lender credit to borrowers in lieu of slightly higher rate.VA does not require mortgage insurance.
However, there is a one time funding fee required on all VA Home Loans which is collected to set up a pool to cover costs of defaulted loans to keep the guarantee to lenders:
- There is no set fee like the upfront FHA mortgage insurance premium of 1.75%
- The funding fee varies between 0.50% to 3.3% of the mortgage loan balance
- The amount charged as the upfront VA Funding Fee is dependent on the type and history of the service by veterans
- There are instances where the upfront Funding Fee is waived. Service connected disabled veterans are exempt from paying the upfront funding fee
How Many Times Can Veterans Use Their VA Eligibility COE
Veterans can use their Certificate of Eligibility (COE) over and over again.
- Facts about VA Home Loans many veterans do not realize is that VA Loan is not a one time use only
- There are no limits on the amount of time veterans can reuse their Veterans Certificate of Eligibility unless they have foreclosed on a prior VA Loans
- Even if veterans foreclosed on prior VA Loans, they still may be eligible depending on the loss VA took
- If veterans used a VA Loan and sells their home and pay off their old VA Loan, they can reuse the full entitlement of their VA Loan for their next home purchase
- There is no limit on how many times they can reuse their VA entitlements
- There is no expiration period either on VA Loans
- Just because veterans decide to rent for many years, their entitlements never expire
- They can always use it during their lifetime
Veterans who refinance their current VA Loan and pay it off with a different loan program, they are entitled to purchase their next home with a VA mortgage. Same applies if they pay of their mortgage loan balance. If the VA Loan is paid off, their entitlement is restored and they can qualify for another VA Loan with full entitlement.
Spouse Of Surviving Veterans Are Eligible
Department Of Veterans Affairs rewards surviving spouses of deceased veterans by offering them VA entitlements.
- However, spouses cannot be remarried
- Only unmarried spouses of fallen veterans killed whole serving can qualify for VA entitlements to purchase and/or refinance homes
- The upfront VA Funding Fee is waived for eligible spouses
- Offering this benefit is a way of our government’s gratefulness for our fallen members of our military services
Not All Lenders Have Same VA Requirements
Private lenders originate and fund VA Home Loans.
- One of the most important facts about VA Home Loans home buyers do not know is that not all lenders have the same VA Lending Requirements
- All lenders needs to abide by and meet VA Guidelines
- However, every lender can have higher credit and income standards for borrowers
- This higher lending requirements are called lender overlays
- Most lenders have overlays on VA Mortgages. Gustan Cho Associates Mortgage Group at USA Mortgage has zero lender overlays on government and conventional loans
- Over 75% of our borrowers are folks who are stressing over their mortgage process due to their current lender overlays or gotten a last minute mortgage denial
- Facts About VA Home Loans is Just because borrowers are told they do not qualify by one lender does not mean another lender cannot qualify them
GCA Mortgage Group at USA Mortgage have any credit score requirements or debt to income ratio requirements. We have originated and funded countless of VA Loans with 580 credit score borrowers with 60% debt to income ratios.
Veterans Can Take Advantage On 100% LTV Cash-Out Refinance
Home prices have been increasing nationally the past few years. Facts About VA Home Loans is that VA allows 100% cash-out refinance mortgages.
- Even with the highest mortgage rates since 2008, their is no stopping home buyers
- There are more home buyers than inventory of homes in the Continental United States
- Both the Federal Housing Finance Agency and HUD increased loan limits for two years in a row due to rising home prices
- Homeowners can take advantage of rising home values and qualify for cash-out refinance VA Loans
- VA allows up to 100% cash-out refinance mortgages
- Cash-Out refinance mortgages have higher mortgage rates than traditional rate and term refinances
- After doing a cash-out refinance mortgage, homeowners can do a rate and term Interest Rate Reduction Refinancing Loan, or IRRRL
- Interest Rate Reduction Refinance mortgages does not require home appraisal nor verification of income
- It is called VA Streamline Refinance where it is very easy and streamlined. IRRRL normally closes in two to three weeks max
Lending Requirements By Lenders With No Overlays
VA has the most lenient mortgage lending guidelines than any other loan program.
- The Department of Veterans Affairs realizes that veterans may have less perfect credit than their civilian counterparts
- This is due for them being deployed for extended periods of time and not being able to pay their bills on time
- Most lenders have lender overlays on VA Home Loans
- Quiana Williams of Gustan Cho Associates Mortgage Group at USA Mortgage has a national reputation of being able to close on VA Loans other lenders cannot because she represents a direct lender with no overlays
- Over 75% of our borrowers are folks who could not qualify at other lenders due to that particular lender having overlays
- Keep in mind that just because home buyers cannot qualify with one lender does not mean they cannot qualify with another lender
- One of the most important facts about VA Home Loans home buyers do not know is that every lender has their own mortgage guidelines
- They all need to meet the bare minimum guidelines of Department of Veterans Affairs, but they can set their own lending requirements that is above and beyond those of VA
- GCA Mortgage Group does not have any overlays and we just go off the minimum guidelines of VA
Types Of Properties Allowed With VA Home Loans
Veterans can purchase owner occupant one to four unit homes with VA Loans.
- Veterans can also purchase condominiums and manufactured homes
- Condominium loans are considered riskier investments by lenders
- Condo home buyers can purchase condominiums that are approved condo complexes
- Condo buyers can search list of VA approved condos by clicking on this website condo search tool
- Just because the condo is on an approved list one year does not mean that it will be on the approved list on future years to come
- Check the list of approved condo communities prior to entering into a real estate purchase contract
To Summarize The 9 Facts About VA Loans Home Buyers Do Not Know
Here are the nine facts about VA Loans Home Buyers Do Not Know that we covered on this BLOG written by Quiana Williams of Gustan Cho Associates:
- 100% down payment and no closing costs
- Borrowers can qualify for VA Loans one year into Chapter 13 Bankruptcy and there is no waiting period after Chapter 13 Bankruptcy discharged date
- VA does not have a minimum credit score or debt to income ratio requirements
- Can purchase one to four unit owner occupant homes and VA approved condominiums
- Two year waiting period after Chapter 7 Bankruptcy and/or housing event
- Deferred Student Loans over 12 months are exempted from DTI calculations
- Veterans with high student loans, VA requires underwriters take 5% of student loan balance and divide it by 12 months
- This resulting figure will be the hypothetical monthly student loan payment
- Surviving Spouse of deceased veterans who had COE benefits qualify
- Can use COE benefits multiple times unless entitlements have been used up with prior foreclosure
- Veterans with bad credit and outstanding collections/charge offs can qualify for VA Home Loans
Author About 9 Facts About VA Home Loans
Quiana Williams NMLS # 1267228 is the author of 9 Facts About VA Home Loans Home Buyers Do Not Know. Quiana is an author, contributing editor, and mortgage expert for Gustan Cho Associates Mortgage Group at USA Mortgage. Quiana Williams is GCA Mortgage Group’s national Reverse Mortgage Expert. She is also nationally known for being able to close loans other loan officers cannot due to her affiliation with GCA Mortgage Group at USA Mortgage where we are direct lenders with no overlays on government and conventional loans. Quiana Williams is a national speaker and mentor to many loan officers. She is also the Associate Editor In Chief for Gustan Cho Associates Mortgage News. Please feel free to contact or text Quiana Williams at Cell: 951.965.6550 . The Quiana Williams Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.