VA Purchasing & Financing
- ADVANTAGES OF A VA LOAN
- VAL LOAN ELIGIBILITY
- FIRST-TIME HOMEBUYER
- VA LOAN CONTRACT GUIDELINES
- VA LOAN PROCESS
Advantages for Military Homebuyers
The VA Loan has many advantages that make it one of the most appealing paths to homeownership for — and this great benefit is reserved exclusively to those who bravely served our country and select military spouses.
When combined, the benefits of the VA mortgage allow service members and Veterans to take advantage of substantial cost savings under qualification requirements designed specifically for members of the military and their unique needs.
Video: Explore VA Home Loans
VA Loan vs. Traditional Mortgages
Military homebuyers have access to one of the most unique and powerful loan programs ever created. See how the VA Loan compares to a traditional home mortgage
(for qualified borrowers)
VA Loans are among the last 0% down home loans available on the market today.
|Up to 20% Down
Conventional loans generally require down payments that can reach up to 20% to secure a home loan, pushing them out of reach for many homebuyers.
Since VA Loans are government backed, banks do not require you to buy Private Mortgage Insurance.
Private Mortgage Insurance is a requirement for borrowers who finance more than 80% of their home's value, tacking on additional monthly expenses.
|Competitive Interest Rates
The VA guaranty gives lenders a greater degree of safety and flexibility, which typically means a more competitive rate than non-VA loans.
|Increased Risk for Lenders
Without government backing, banks are taking on more risk which, in turn, can result in a less-competitive interest rate on your home loan.
|Easier to Qualify
Because the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA Loans, making them easier to obtain.
|Standard Qualification Procedures
Conventional options hold stricter qualification procedures that can put homeownership out of reach for some homebuyers.
Regulations and Fees
Although the VA Loan is a federal program, the government generally does not make direct loans to veterans. Instead, private lenders finance the loan while the Department of Veterans Affairs offers a guaranty.This guaranty, which protects the lender against total loss should the buyer default, provides incentive for private lenders to offer loans with better terms.
In San Diego County, as of 2019, veterans who qualify for the VA Loan can purchase a home worth up to $690,000 without putting any money down; however, with the current VA Loan Limits vary from the base rate of $484,350 or higher, depending on their desired purchase location.
The VA Funding Fee goes directly to the VA to ensure the program keeps running for future generations of military homebuyers by removing any additional burdens off tax payers and veterans. The fee varies depending on the borrower's circumstances and does not apply for veterans with service-connected disabilities. For example, if this is your first time using the VA Home Loan Program, the funding fee is typically 2.15 percent of the purchase price of the home. For subsequent use of your VA Loan benefit, the fee is 3.3 percent.VA borrowers can roll the funding fee into their overall loan amount. The VA also limits closing costs for veterans and allows sellers to pay most or all of those expenses. Many of our borrowers purchase a home with no money due at closing.
VA Loan Eligibility Requirements
VA Loans are available exclusively to those who have served our country and select military spouses. The VA Loan is specifically known for its no down payment requirement and competitive rates. It's ultimately up to the VA to determine eligibility for the home loan program, but prospective borrowers can get a good idea by looking at the VA's basic eligibility guidelines. VA Loans are generally available for veterans and active duty service members who meet the basic service requirements.
Determine if you are eligible for the VA Home Loan benefit based on service and discharge requirements.
How to Apply for a VA Loan Certificate of Eligibility (COE)
While you don't need your VA Certificate of Eligibility in hand to start the loan process, this certificate is a very important part of your loan application. Your COE verifies that your length and character of service make you eligible to use the VA home loan benefit.
You can apply for a VA Loan Certificate of Eligibility three different ways:
VA Loan Income Requirements
Homebuyers interested in the VA Loan aren't required to reach any kind of income threshold to use their home loan benefits; however, borrowers are expected to have stable, reliable income that will cover monthly expenses – including their new mortgage payment.
Additionally, the VA requires that borrowers maintain a certain amount of income left over each month after all major expenses are paid. The excess is meant to cover typical family needs, such as food, transportation and so forth and is referred to as residual income. Residual income is a large reason why the VA Loan maintains one of the lowest foreclosure rates of all major lending options.
By enforcing residual income requirements, the VA increases the chances of its borrowers earning sufficient income to meet all financial obligations, and also ensures borrowers have a cushion in the event of an emergency.
Additional Eligibility Requirements
Although the VA determines the guidelines for those who are eligible for the VA Loan benefit, private lenders who finance the home purchases have an additional set of criteria a potential borrower must satisfy, including debt, income and credit requirements.
When you apply for a VA Loan, your VA Loan officer will pull your credit score from the three leading credit agencies, as well as examine your debt-to-income ratio.
Finally, a veteran applying for a VA Loan must not have been discharged under dishonorable conditions.
How to Apply for a VA Loan
The VA loan process typically takes 30 to 45 days once you’re under contract on a home, although every buyer’s situation is different. Applying for a VA loan doesn’t obligate you in any way to a particular lender or to moving forward with the homebuying process.
Here’s a look at the four basic steps to applying for a VA home loan:
Purchasing a first home is an exciting milestone in any person's life. For some, the process may also seem very intimidating. A HallDoran Realty agent can help you navigate the home buying process and will work diligently to help you find the right home.
How Much Home Can I Afford?
Typically, the first question would-be homebuyers ask themselves is, "What can I afford?" There are many factors that determine what a reasonable mortgage payment should be for an individual, including annual income, existing debt payments, down payment (if any), as well as additional costs like homeowners insurance and housing association fees.
Educate yourself on the true costs of home ownership. By planning ahead, you will know how much you can afford and avoid any surprises from unanticipated expenses. Watch the video.
You may use this mortgage calculator to help you calculate what an affordable mortgage payment is for you.
VA Home Loans: What are MPRs?
What Type of Loan Should I Get?
There are many financing options available for homebuyers out there, each with their own unique advantages. For most veteran and active duty military members, HalLDoran Realty highly recommend the federally-backed VA Loan due to its distinct benefits over traditional loans, such as:
You should also know that:
When using a VA Loan, it's important to find a real estate agent that not only knows the intricacies of the VA Benefit Program, but also understands the specific needs of veterans and active duty military members. The broker and agents of HallDoran Realty continuously take training courses to help guide you through the process of purchasing a VA qualified home and answer questions you may have. Further, we will connect you with VA approved lenders who will assist you in the loan process.
Signing A Purchase Agreement
When you find the home that is right for you, your HallDoran Realty agent can help you develop an offer, create the sales contract, and assist you with the negotiation process.
Remember to include in your sales contract, a contingency which voids the contract if you are unable to obtain VA-guaranteed financing. An example of a VA Option Clause:
"It is expressly agreed that, notwithstanding any other provisions of this contract, the purchaser shall not incur any penalty by forfeiture of earnest money or otherwise be obligated to complete the purchase of the property described herein, if the contract purchase price or cost exceeds the reasonable value of the property established by the Department of Veterans Affairs. The purchaser shall, however, have the privilege and option of proceeding with the consummation of this contract without regard to the amount of the reasonable value established by the Department of Veterans Affairs."
Other contingencies to consider are an appraised value contingency and a satisfactory home inspection contingency. Your HallDoran Realty agent can advise you if these or other contingencies are typical in your real estate market.
Additional Informative Video Links
VA Loan Contract Guidelines
The journey to homeownership can oftentimes cause would-be homebuyers to run the gamut of emotions — from excitement to nervousness and everything in between. As the homebuying process transitions and you are under contract, it is important to remember the process is not over and there is still work to be done before celebrating.
Although rare, some homebuyers can lose focus once they are under contract. This can result in some delays to the financing process or even result in losing the opportunity to secure a loan. Your Home Loan Specialist will instruct you on important things to maintain once you are under contract.
Your VA approved lender will review your credit inquiries, bank statements and pay stubs to determine if you have debts that were not disclosed on the application. From the time you apply for the loan to the time you close, we advise you do not apply for any new debts – including co-signing on a note, buying or leasing a vehicle and refinancing other notes – without consulting your loan officer.
While Under Contract:
Even though your loan may still close, your closing could be delayed while additional documentation is obtained as we work to verify all your information. If the new debt increases your debt load, there is an increased risk of changing your debt to income ratio and effectively ending your chance to purchase the home you have selected.
Flat Fee Charged By A VA Lender:
In using your VA Home Loan benefit, you may be charged a 1% flat charge by the lender (sometimes referred to as a loan origination fee), and whatever reasonable and customary amounts for any or all of the following:
In many instances you can negotiate with the seller to pay part or all closing costs. To limit your closing expenses, ask your real estate agent to submit your offer with the seller paying your closing costs.
Stay In Touch With Your VA Lender
While this information may cause some trepidation, if you stay on track and follow the guidance of your approved VA Loan specialist, you have little to worry about. If you have any questions about these possible hiccups, please do not hesitate to contact your VA Loan specialist.
The VA Loan Process
Your Steps to Homeowership
1. SELECT A VA-APPROVED LENDER
READ MORE: Selecting A VA-Approved Lender
2. OBTAIN YOUR CERTIFICATE OF ELIGIBILITY (COE)
READ MORE: Obtain Your Certificate of Eligibility (COE)
3. PRE-QUALIFY FOR YOUR LOAN AMOUNT (OPTIONAL)
Meeting Conditions in a Preapproval Letter
Examples of documents required in your preapproval process
READ MORE: Pre-Qualifying For Your Loan Amount
4. GO HOUSE HUNTING AND SIGN A PURCHASE AGREEMENT
READ MORE: Go House Hunting & Sign A Purchase Agreement
5. LENDER PROCESS APPLICATION AND ORDERS VA APPRAISAL
READ MORE: Lender Process Application & VA Appraisal
6. CLOSE ON YOUR LOAN AND MOVE IN