VA loans often have lower mortgage rates than any other mortgage program. VA mortgage rates are often lower than conventional mortgage rates. There is no private mortgage insurance required.
How The VA Mortgage Process Works for Borrowers Qualifying For a VA Loan
Only active or retired members of the U.S. military with a Certificate of Eligibility (COE) can qualify for a VA home loan.
The Veterans Administration does not originate or fund VA loans. The VA’s role is to ensure VA loans are originated and funded by private lenders if borrowers default or foreclose on their VA loans.
VA mortgages are available to active, retired, and eligible surviving spouses of a branch of the U.S. Military. In 2019, the VA guaranteed over 625,000 VA loans to veterans.
How The VA Mortgage Process Work For Veteran Borrowers
Benefits of VA Mortgages Versus Other Loan Programs
One of the major benefits of VA loans is that borrowers do not need a down payment. Lenders will offer VA loans with 100% financing. FHA loans require a 3.5% down payment. Conventional loans require a 3.0% to 5.0% down payment. Mortgage insurance is not required on VA loans.
HUD, the parent of FHA, has an annual FHA mortgage insurance premium of 0.55% that needs to be paid for the life of a 30-year fixed-rate mortgage.
Conventional loans require private mortgage insurance for the loan-to-value greater than 80% LTV. Homeowners eligible for VA loans qualify for a 90% LTV cash-out refinance mortgage. VA mortgages have the best rates of any other loan program. Mortgage rates on VA mortgages depend on the borrower’s credit scores.
How The VA Mortgage Process Work For Borrowers With Low Credit Scores
The VA does not have a minimum credit score requirement. Why is it that lenders are requiring minimum credit score requirements such as 620 to 640 FICO? This is because not all lenders have the same VA lending requirements. All lenders must ensure borrowers meet the minimum VA agency mortgage guidelines.
Lenders can impose additional lending guidelines of their own, which are called lender overlays. This is why some lenders may require a 620 credit score requirement while others require a 640.
The great news at Gustan Cho Associates Mortgage Group is we do not have any lender overlays. A large percentage of our borrowers are folks with under 620 credit scores. We recently closed a borrower with a 530 FICO.
How Much Out of Pocket Do I Need To Purchase a Home With a VA Loan
Most of our borrowers at Gustan Cho Associates do not have to come out of pocket when buying a home with a VA loan. The lender will provide 100% financing. Therefore, there is no down payment required on a home purchase.
Closing costs can be covered either with a seller concession or lender credit. The VA funding fee can be rolled into the loan.
The loan officer can quarterback the deal where the borrower does not have to incur closing costs. Examples of closing costs are appraisal, prepaid, one-year homeowners insurance premium, title charges, origination fees, and other third-party charges to close the loan.
Qualifying For a VA Mortgage With a Lender With No Overlays
As mentioned, Gustan Cho Associates has no lender overlays on VA loans. We have no minimum credit score or maximum debt-to-income ratio requirements on VA loans. We only follow VA agency guidelines and have zero overlays. Many of our borrowers have under 620 credit scores and are manual underwriting. Over 80% of our borrowers could not qualify at other lenders due to their lender overlays. To qualify with a five-star mortgage company licensed in multiple states, please get in touch with us at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The Team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays.
