VA Purchase

VA Purchase

The Guidelines For Using A VA Home Loan To Purchase A Property


The first thing that military veterans and active personnel need to realize about the VA Home Loan program is that it is not directly offered by the VA. The VA will financially back a qualified loan, which gives the lender the confidence it needs to release the funds under the guidelines of the program. That means that a veteran will have to apply for a mortgage from a bank under the guidelines of the VA Home Loan program.

There are a lot of reasons why veterans and active personnel are using the VA Home Loan program. The biggest reason is that a VA Home Loan significantly lowers the cost of ownership to the veteran. Not only does the VA Home Loan program offer competitive interest rates, but there is also no need for a down payment. No matter how large your mortgage will be under the VA Home Loan program, you will never have to pay a down payment to qualify.

With standard loans, the lack of a down payment means that mortgage insurance will get added to the cost of the loan. If you are getting a standard loan for $150,000 and you are not putting at least 20 percent down, then the mortgage insurance will add at least $191 per month to your payments. With a VA Home Loan, these mortgage insurance payments do not exist and that lowers the cost of ownership to the veteran.

One final way that the VA Home Loan program lowers the cost of ownership is that the seller pays the final closing costs. Within the program are stipulations that remove the burden of closing costs from the veteran and allow the transaction to go through with the seller paying all of the closing costs. With the VA Home Loan program, the veteran or active service member can save thousands of dollars in the cost of owning their new home.

The process for applying and getting approved for a VA Home Loan is similar to a standard mortgage application process. There is a credit check, but veterans with credit scores as low as 620 can still get approved. The veteran needs to have a debt ratio which says that only 41 percent of his income goes to paying bills. This assures the lender and the VA that the borrower can afford the home and that he can also afford the upkeep as well.

In order to get a VA Home Loan, you will need your Certificate of Eligibility and your entitlement number. Your Certificate of Eligibility can be obtained through the VA office and it will require you to prove that you meet the minimum service criteria. The entitlement number is the amount of money that the VA is willing to back when the final mortgage is completed. As long as the entitlement number matches the purchase price of the house, you will not need to pay a down payment. However, if your entitlement amount does not match the purchase price of the house, you can still get the loan, but you will need to cover the difference with your own funds.

The property that you purchase must be your primary dwelling. You can purchase an apartment complex with a VA Home Loan provided that one of the apartments is your primary registered address. You can also use a VA Home Loan to purchase a plot of land, a manufactured home, remodel a home or add energy efficient fixtures to your existing home.

The VA requires that you only have one outstanding VA Home Loan to qualify. The one exception here is active service members who can have two properties purchased by VA Home Loans. Retired veterans can only own one property that was purchased with a VA Home Loan. If you want to buy a second property with a VA Home Loan, then you will either need to sell the existing property, or you will need to get another veteran to assume the mortgage and use his eligibility to assume the financing.

Veterans and active service members can only use VA Home Loans to purchase properties in the continental United States, Alaska, Hawaii or any United States territory or possession. You cannot use a VA Home Loan to purchase a piece of property or a home in a foreign country.

The process to getting a VA Home Loan is a step-by-step method that will allow the veteran or active service member to be able to buy the home of his dreams with minimal costs of ownership and with a competitive interest rate.