Veterans Affairs (VA) Loan Requirement & Eligibility
A VA loan is a mortgage issued by private banks, mortgage companies, and credit unions under the U.S Department of Veteran Affairs Program. The mortgage is guaranteed by the federal government but administered by private lenders. Its main motto is allowing veterans, service members, and surviving spouses to become homeowners and lead a civilian life.
The VA loan doesn’t require any monthly down payment. It is officially no down payment for a VA loan. In some cases, if your purchase price for the home is more than the appraised value, you may have to pay at least a portion of the difference. However, the chances of such circumstances are fewer.
VA Loan Property Requirements
You must fulfill some specific minimum property requirements for the VA loan agreement. The house property financed by a VA loan must be safe, structurally sound, and sanitary.
Also, the lender will hire a VA-approved appraiser to estimate the house’s market value and inspect the VA’s minimum property requirements. The VA appraisal you receive will also benefit you when you go for refinancing. You can also apply for a VA rehab, renovation loan, and VA refinances.
VA Loan Eligibility
The VA loan is not offered to everyone. To be eligible for a VA loan, you need to fulfill any of the following eligibility criteria:
- You served for 90 consecutive days or active service during wartime.
- You did 181 straight days of active service during peacetime.
- You did six years in the National Guard or Reserves.
- You are the spouse of a service member or veteran who died in the line of duty or due to service-related disabilities.
If you qualify for any of the above services, you are eligible for VA home loan approval.
How to Apply for a VA Loan?
VA loans are similar to other types of loans and mortgages. You can ask a bank, mortgage lender, or credit union that offers VA loans. The process is quite similar to any other loan process.
The lender will ask for basic information, your income source, and additional financial information to decide whether you qualify for a VA loan or not. However, apart from these documents, you also need a VA certificate of eligibility.
For a VA loan, the certificate of eligibility is a document from the department of Veteran Affairs. It signifies that you meet the service requirements for a VA loan. It also shows that you meet the military service or surviving spouse requirements to get a VA loan. This unique certificate makes you eligible and eases further loan proceedings.
The best and quickest way to get a VA certificate of eligibility is through a VA-approved lender. Other ways to receive the VA certificate of eligibility are through:
- You can request the certificate on VA's eBenefits portal.
- Also, you can mail the regional loan officer a filled form of "Request for Certificate of Eligibility Form."
However, it’s advisable to go to the VA mortgage lender and ask for the VA certificate of eligibility. In most cases, this option works much faster and smoother for veterans. Once you receive the certificate of eligibility, start looking for house property.
Advantages Of VA Loans For The Veterans
VA loans come with several advantages. Let’s look at them one at a time:
No Down Payment Required
There is no requirement for a down payment for VA loans. Saving money to build credit may become difficult for service members so that eligible borrowers can finance 100% of the property value without any down payment.
Have A Comparatively Low-Interest Rate
The interest rate for VA loan borrowers is typically 0.5-1% less than the conventional mortgage programs. This helps veterans save money to sustain financial stability.
No Income limit
There is no income limit to be eligible for a VA loan. The VA has no such requirement of any income limit for the borrowers to qualify for the programs. Also, there is a relaxation on credit scores for VA loan borrowers. However, the credit score relaxation differs from banks and lenders but is still less than the conventional home loan programs.
No Private Mortgage Insurance Costs
PMI (Private Mortgage Insurance) costs are the insurance that protects lenders in case the borrower defaults. So, in other types of mortgages, they ask for PMI until you have owned 20% of the home’s equity. But for Veterans, this amount is relaxed. This will save them from financial instability and increase their savings.
Low Closing Costs Limit
Once the loan is approved, the lender asks for the closing costs. But the VA loan borrowers have very minimum closing costs and sometimes even no closing costs.
Lifetime Benefits
Those eligible for the VA loans program can utilize the benefits over a lifetime. The VA loan is not a one-time loan approval. As veterans, you have lifetime access to its benefits and relaxation.
These advantages act as safeguards for veteran home buyers to look out for affordable home ownership.
The VA home loan is the appraisal for the service members, veterans, and active members for the service they did for the country. The VA borrowers should apply for VA loans to gain financial advantages from the VA loan programs. Relaxing credit scores and low-interest rates help VA-eligible homebuyers afford and build home ownership.
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