WHAT IS A VA LOAN?

A VA loan is a special type of loan that is guaranteed by the U.S. Department of Veterans Affairs. It is offered to qualified borrowers as part of their military benefits. This program was created to help veterans become homeowners! VA loans have more lenient credit, down payment and debt to income requirements that most other loans. They typically offer more attractive interest rates and lower closing costs which make them a great option for any veteran or military personell.


How do VA loans work?

VA loans work much like those of other loan types. You will complete an application and provide proof of income and any required asset documentation. Although on the surface, VA loans seems to work the same as other loan programs, there are some big differences in loan-related costs, eligibility and fees associated with VA loans.

Military service history - the borrower must have served enough time to meet eligiblility requirements.
VA loans are for military and veterans only. Spouses can be co-borrowers but no other non military can be a borrower.
VA Funding Fee - a funding fee is typically required on all VA loans. There are some exceptions that allow no funding fee. The funding fee can range from 0% to 3.6%. The funding fee however, can be included into the loan amount.


VA loan eligibility

VA loans require a COE (certificate of eligibility) to be provided for all VA loans. In most cases, we are able to pull this automatically through the VA. This shows the eligibility of the borrower, funding fee and if there are any prior loans that would limit the amount of the loan. According to the VA, you meet minimum service requirement if:

For active-duty service members that served at least 90 continuous days of active duty
For veterans, National Guard members or Reserve members that meet the active-duty requirements
For surviving spouses that your spouse is a service member who is missing in action or who died while in service or from a service-related disability

COE's can be requested by the borrower through the VA


Credit and DTI (debt to income)

There are many factors that are considered when applying for a VA mortgage regarding credit. Below are a few of the more common credit items that are reviewed.

Chapter 7 Bankruptcy must be discharged 2+ years. Chapter 13 can qualify while still in plan but must be at least 12 months and show all payments made on time. Court approval for a VA loan is also required.
No major derogatory filed within 24 months. This includes charge offs, collections, repos, etc. This does NOT include medical.
No late payments on installment or mortgage debt within 12 months and no more than 2 times 30 day late within 24 months.
Rental payment history cannot have any 30 day late or more in the last 12 months.

Debt to income ratios can be expanded up to 60% in some cases depending on certain factors like residual income, liquid reserves, minimal increase in housing payment for example.


Why choose a VA loan?

VA loans are a great option for military and veterans. As you can see there are a number of reasons why, if eligible you should pursue obtaining a VA loan. Please call me to discuss your options.


As you can see, VA loans are a great option for qualified borrowers. If you would like more information, please call me at 352-446-9422 or email me at rick.scherer@cardinalfinancial.com. If you would like to get pre-approved, you can apply now:

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