VA Home Loan Guidelines

VA Home Loan Guidelines

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers VA home loan guidelines and requirements for home purchases. VA loans are the best residential loans in the U.S. There is no better loan program than VA loans. The Department of Veterans Affairs (VA) is a government entity insures VA loans. VA offers the lowest interest rates, no mortgage insurance required, and 100% financing. Lenders can offer VA loans to eligible borrowers who meet VA home loan guidelines at low rates with 100% financing with no mortgage insurance due to VA’s Guaranty. In this article, we will discuss and cover VA guidelinesWe will go over VA home loan guidelines and requirements for home purchases.

VA Home Loan Guidelines on Credit Scores

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The Department of Veterans Affairs does not have a minimum credit score requirement. You can have credit scores as low as 500 with some lenders. I’ve seen some instances with no credit scores, but they are far and between. However, the better the score, the easier to obtain financing. We can offer VA loans with no overlays. As long as borrowers can get approve/eligible per the automated underwriting system, we are set to go. We have no other overlays on VA loans and follow VA Home Loan Guidelines. To get an approve/eligible per the automated underwriting system, a 580 credit score is highly recommended, with timely payments in the past 12 months.

VA Home Loans Guidelines and How Does Process Work?

Because VA offers 100% financing for veterans with poor credit or limited resources, it is the cheapest type of mortgage program available. What exactly are VA loans? The Veterans Administration guarantees the loans and does not act as the lender. The Veteran has to have a VA certificate of eligibility to qualify. Better known as a DD214 VA Service Requirements. Activity-duty service. Ninety days consecutive days of active service. Six-plus years in the Reserves or National Guard. National Guard and reserves. 181 days of active duty service during peacetime.

Other Factors Where Borrowers Meet VA Home Loan Guidelines

There are circumstances if they were discharged due to hardship, reduction in force, discharged due to
government convenience, some medical conditions, or service-related disability where borrowers can meet VA Home Loan Guidelines: Dishonorably discharged Veterans are ineligible for this loan. VA Mortgage Loan Benefits:

  • 100% Financing
  • Lower interest rates
  • Higher DTI ratios
  • Lower closing costs
  • No mortgage insurance
  • Easier to qualify for
  • No credit score requirements
  • No debt-to-income ratio caps

Gustan Cho Associates Mortgage Group has no overlays on VA Home Loans.

Loan Limits on VA Loans

Depending on the state and the county VA loan limit increased to $453,100 in 2018 from $424,100, except in 220 high-cost counties where they are higher. This represents a 6.8% increase this year. For comparison, there are 3,234 counties and county equivalents. As of 2020, the United States Department of Veterans Affairs has eliminated the maximum loan limit on VA loans. VA loans no longer have a maximum loan limit cap on VA loans.

Debt-To-Income Ratio Guidelines on VA Loans

VA has set no loan limits on debt-to-income ratios, but the lenders have their own DTI limits, often called lender overlays, so finding the right lender with no overlays is key. Typically, lenders have a 41% limit, but I have seen Back end ratios as high as 65% qualify for the higher DTI with strong compensating factors. It depends on how the Automated Underwriting System reads borrowers’ credit and income profiles. Compensating Factors are key. Here are examples of compensating factors:

  • Large amounts of cash
  • Minimal increase in current housing payment (low payment shock)
  • High net worth
  • Ability to make a down payment
  • High credit score
  • High net worth

2020 VA Funding Fee Chart for 2018

VA Chart: Purchase and Construction Loans

va chart purchase and construction loan

VA Funding fee Chart: Rate/Term or Cash/Out

va cashout refinance

VA Funding Fee Chart: IRRRL’S

va funding chart

VA Cash-Out Refinance

The VA’s Cash-Out allows veterans to take cash out of their property up to 100% of the property’s appraised value. No other loan will allow this to pay off debt, home improvements, or schooling. As home values continue to rise, this may be a great tool for veterans to use with refinancing.
VA IRRL Streamline
If you currently have a VA loan, they allow you to do a refinance to lower your rate with very few documents. All you need is a job, a credit score with no latest on the mortgage for the last 12 months, and no appraisal. If you have any questions about VA loans, I’ve been involved in finance for 33 years and take pride in helping Veterans that have served our country.

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