Serving in the army has many advantages, including access to VA loans. Here are the top things you need to know before getting a VA loan approved:-
VA Loan Eligibility Requirements
A VA loan is available to active service military, veterans, and surviving spouses, and in some cases, civilians. Some criteria must be met before a veteran can qualify for a VA loan.
Serving in the National Guard or Reserves requires a minimum of six years of service. Before a military member may qualify for a VA loan, he or she must serve for six years. Individuals who served for fewer than six years and were dismissed due to a service-connected disability may be eligible.
Alternatively, you must have completed a period of 90 days of active service throughout a war or 181 days of active service during a peaceful period. It is only then that you will be eligible for a VA loan.
Certificate of Eligibility
You will need a Certificate of Eligibility when applying for a VA loan. This Certificate can be applied online through your eBenefits site or through your lender. While doing so, it will be necessary to provide some information depending on your current status to apply.
Active duty service members must present a signed statement of service, and veterans must provide a Certificate of Release or Discharge from Active Duty, the DD Form 214.
A statement of service should include your name in full, year of birth, the number assigned by the Social Security Administration, period of employment, any lapsed time, and the name of the command that provides the data. More information can be assessed on the VA benefits website or alternatively by consulting a lender.
How VA Loans Work
In a nutshell, you complete out VA documentation to verify your eligibility for the program. You’ll also get your entitlement, which is the financial amount that each VA loan guarantees. Lenders may be ready to lend up to four times your entitlement amount.
Private mortgage insurance (PMI) is not required with VA loans, but you will be charged a VA funding fee at closing, which will be a percentage of the loan’s total value. This charge contributes to the program’s continued existence for future borrowers.
VA Loan Home Occupancy Requirements
You must meet occupancy standards in addition to ensuring that you are eligible for a VA loan. Veterans and active service individuals should confirm that they will primarily live in the home. On finalizing the loan, homebuyers have a period of 60 days to inhabit the property, which the VA considers to be an acceptable amount of time.
However, individuals on active duty or about to leave the military may feel like two months will be limited time. Fortunately, the VA allows these homeowners to stay longer than 60 days. Occupancy of more than one year is considered unsatisfactory.
Once you’ve decided to use your VA home loan to purchase a VA condo, the VA.gov website is a good place to start for Veterans Affairs approved condos for sale. There, you can conduct a search for a VA approved condo list of properties that have previously been approved by the VA. This list is always up to date because it is updated in real-time.
VA Loan Underwriting Requirements
Underwriters want to make sure that the borrower is a good credit with no record of late payments or collections. It is also the underwriters’ duty to find more information on the borrower’s financial state. Borrowers’ income should be enough to pay back the loan.
Loans can be underwritten through the VA loan automated underwriting system (AUS) or manually. All loans are routed through AUS by default. The system is used by lenders to compare a borrower’s financial information, including income and credit score, to the VA’s underwriting requirements. This is how a pre-approval will be granted.
The AUS analyzes the risk level of a borrower, and low-risk candidates may be exempt from some paperwork requirements. This could imply avoiding the employment verification process.
If you don’t have excellent credit or want to buy a home with no down payment but don’t want to pay mortgage insurance, consider a VA loan.