For many young veterans, coming back from service can sometimes be difficult. Feeling at home again is always a big priority. After completing time in the military, many veterans are interested in establishing their roots in a new home. One benefit of military service is the VA loan guaranteed by the Department of Veteran Affairs. This federally-guaranteed VA loan helps veterans build their future with the purchase of a new home.
"The main purpose of the VA home loan program is to help veterans finance the purchase of homes with favorable loan terms and at a rate of interest which is usually lower than the rate charged on other types of mortgage loans," reports the Department of Veteran Affairs.
A VA loan is helpful to veterans who wish to purchase a home. The loans are available to most veterans, including those without great credit. Because interest rates are not heavily credit-driven, veterans with less-than-perfect credit can still have access to very low rates. Another benefit of the VA loan is that no down payment is required on a new home purchase! This allows veterans with no money saved to still take advantage of a VA loan.
Who is Eligible?
VA home loan eligibility is based on the length of time served in the military and the conditions under which the veteran was discharged. Most veterans who have served at least 90 days during wartime, or; served at least 181 days during peacetime are eligible. In addition, members of the Reserves or National Guard are eligible for this VA home loan program if they have served at least six years. In order to be eligible for this loan program, veterans must have been discharged from service under conditions other than dishonorable.
In some cases, VA loans are available to spouses of veterans. A spouse of a deceased veteran may be eligible if the veteran died from service-related causes. Spouses of a veteran who is Missing in Action or has had Prisoner of War status for at least 90 days, may also be eligible for the program. This federally-guaranteed loan will make sure to protect and help veterans and their families.
What are the Credit and Income Requirements?
The VA does not have a minimum credit score requirement. However, most lenders require credit scores above 620. A qualifying veteran's debt to income ratio, in most cases, should be under 41% and the veteran must have sufficient residual income for monthly expenses. The residual income requirements depend on the location of the veteran, as well as the amount of people in their family.
What Kind of Home Can I Purchase and Where?
All of the following homes are eligible for a VA loan:
-1-4 Unit Properties.
-Approved Condominiums.
-Approved Planned Unit Developments (PUDs).
-Approved Manufactured Homes.
The VA guarantees loans for approved homes in the United States, its territories, and possessions.
How Does it Work?
To use a VA loan to purchase a home, a veteran must get pre-approved for the amount needed to finance. Many find it helpful to first obtain pre-approval for their VA loan before looking for a home. This way, the veteran will know how much financial aid they qualify for while shopping for a home.
Service men and women can start their search independently or with the help of a real estate agent. Once a veteran has found the perfect place, the next step is to finalize the purchase agreement and complete the VA loan process. A loan specialist will help guide veterans through the underwriting, loan approval, and closing process. Upon completing these steps, all that is left, is to transfer the title and open the doors to a new home!
How Do I Get Started and Qualify?
To qualify for a VA loan one will need to prove their service, as well as some other details. The following documentation will be needed to help complete the loan process:
-DD-214 or other statement of service.
-Pay stubs to verify one's income.
-W2s for the past two years or tax returns.
-Copy of a veteran's driver's license.
-Bank statements from the last two months or other asset used for down payment (if applicable).
-Home owner's insurance policy, for those that already found a home.
-Copy of social security card.
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