How The VA Mortgage Process Work

How The VA Mortgage Process Work For Home Buyers

Gustan Cho The Mortgage Expert
April 1, 2020 - 4 min read
Gustan Cho Associates are mortgage brokers licensed in 48 states
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This ARTICLE On How The VA Mortgage Process Work For Home Buyers Was PUBLISHED On April 1st, 2020
How The VA Mortgage Process Work For Home Buyers

How The VA Mortgage Process Work? VA loans are the best mortgage loan program for owner-occupant homes.

  • The Department of Veterans Affairs (VA) is the federal agency that is in charge of VA loans
  • There are no down payment requirements on VA loans
  • Lenders offer 100% financing to eligible borrowers with a certificate of eligibility (COE)
  • VA loans often have lower mortgage rates out of any other mortgage programs
  • VA mortgage rates are often lower than conventional mortgage rates
  • There is no private mortgage insurance required
  • The VA Funding Fee can be rolled into the loan
  • Only eligible active and/or retired members of the United States Military with a certificate of eligibility are eligible for VA loans
  • The US government created and launched VA mortgage loans to reward our men and women in uniform for their service
  • Gustan Cho Associates Mortgage Group has no lender overlays on VA loans

In this article, we will discuss and cover How The VA Mortgage Process Work For Home Buyers.

How The VA Mortgage Process Work For Borrowers Qualifying For A VA Loan

Not everyone who has served in the United States Armed Services qualified for a VA loan.
  • They need to be eligible
  • Only active and/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 nor funds VA loans
  • The VA’s role is to insure VA loans that are originated and funded by private lenders in the event borrowers default and/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 And Qualification Requirements
Active, retired, and un-married surviving spouses of military members with a valid certificate of eligibility are eligible to qualify for VA loans.

In the following paragraph, we will compare VA mortgages versus other loan programs.

Benefits Of VA Mortgages Versus Other Loan Programs

What are the benefits of VA mortgages compared to other loan programs?

One of the major benefits of VA loans is borrowers do not need any down payment.

  • Lenders will offer VA loans with 100% financing
  • FHA loans require 3.5% down payment
  • Conventional loans require 3.0% to 5.0% down payment
  • Mortgage insurance is not required on VA loans
  • FHA has an annual FHA mortgage insurance premium of 0.85% 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 that is greater than 80% LTV
  • Homeowners who are eligible for VA loans can qualify for a 90% LTV cash-out refinance mortgage

VA mortgages have the best rates than any other loan program. Mortgage Rates on VA mortgages depends 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 then 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 need to make sure borrowers meet the minimum VA Agency Mortgage Guidelines
  • However, 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 other lenders may 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 and/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 come up with any 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

How to Qualify for a VA Mortgage Loan with No Overlays

As mentioned earlier, 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. A large percentage of our borrowers have under 620 credit scores and are manual underwriting. Over 75% of our borrowers are folks who could not qualify at other lenders due to their lender overlays. To qualify with a five-star mortgage company licensed in multiple states, please contact 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.