Are you a veteran looking to purchase a home but struggling to secure a mortgage? VA housing loans can help. With low interest rates, favorable terms, and no down payment requirements, VA loans have helped millions of veterans achieve their dream of homeownership. However, navigating the rules and regulations surrounding VA loans can be confusing. In this article, we’ll break down everything you need to know about VA housing loan rules so you can make an informed decision about whether a VA loan is right for you.
What is a VA housing loan?
A VA housing loan is a mortgage loan available to eligible veterans, active-duty military members, and surviving spouses that is guaranteed by the Department of Veterans Affairs. The VA doesn’t actually lend the money – instead, it provides a guarantee to the lender that if the borrower defaults, the VA will cover a portion of the loan. This guarantee makes VA loans less risky for lenders, which means they can offer more favorable terms to borrowers.
Who is eligible for a VA housing loan?
To be eligible for a VA housing loan, you must meet one of the following requirements:
Category |
Requirements |
|---|---|
Service members |
90 consecutive days of active service during wartime or 181 days of active service during peacetime. |
Veterans |
Honorable discharge after 90 days of active service during wartime or 181 days of active service during peacetime. |
National Guard and Reserves |
90 consecutive days of active service during wartime or six creditable years of service in the Selected Reserve or National Guard. |
Surviving spouses |
Unremarried spouses of service members who died in the line of duty or as a result of a service-related disability. |
What are the benefits of a VA housing loan?
VA loans offer several benefits that make them an attractive option for eligible borrowers:
- No down payment required
- No private mortgage insurance (PMI) required
- Lower interest rates than conventional loans
- No prepayment penalty
- Flexible credit requirements
How much can you borrow with a VA housing loan?
The amount you can borrow with a VA housing loan depends on several factors, including your credit score, income, and the property you wish to purchase. There are also limits on how much you can borrow – these limits are determined by the county where the property is located and can change each year. In 2021, the VA loan limit for most counties is $548,250. However, in high-cost counties, the limit can be as high as $822,375.
What are the requirements for using a VA housing loan?
When using a VA housing loan, there are several requirements you must meet:
- The property must be your primary residence
- The property must meet minimum property requirements set by the VA
- You must have a valid Certificate of Eligibility (COE) from the VA
- You must meet the lender’s credit and income requirements
FAQs
What is a Certificate of Eligibility (COE)?
A Certificate of Eligibility (COE) is a document that verifies to the lender that you are eligible for a VA housing loan. You can apply for a COE online through the VA’s eBenefits portal, or you can ask your lender to help you obtain it.
Do I need to be a first-time homebuyer to use a VA loan?
No, you can use a VA loan multiple times throughout your lifetime as long as you meet the eligibility requirements.
Can I use a VA loan to buy a vacation home or rental property?
No, VA loans can only be used to purchase a primary residence.
Are there any fees associated with a VA loan?
Yes, there are several fees associated with a VA loan, including a funding fee, appraisal fee, and closing costs. However, the VA limits the amount that lenders can charge for these fees.
Can I use a VA loan to refinance an existing mortgage?
Yes, you can use a VA loan to refinance an existing mortgage through the VA’s Interest Rate Reduction Refinance Loan (IRRRL) program.
What happens if I can’t make my mortgage payments?
If you can’t make your mortgage payments, you should contact your lender immediately. If you default on your VA loan, the VA will work with the lender to try to find a solution before foreclosing on the property.
Can I choose any lender for my VA loan?
Yes, you can choose any lender that participates in the VA loan program. However, it’s important to shop around and compare rates and terms from multiple lenders to ensure you’re getting the best deal.
What are the credit requirements for a VA loan?
While there is no minimum credit score requirement for a VA loan, most lenders look for a credit score of at least 620. However, each lender sets its own credit requirements, so it’s possible to get a VA loan with a lower credit score.
Can I use a VA loan to buy a manufactured or modular home?
Yes, you can use a VA loan to purchase a manufactured or modular home as long as it meets certain requirements, including being permanently affixed to a foundation.
Can I use a VA loan to buy a fixer-upper?
Yes, you can use a VA loan to purchase a fixer-upper as long as the repairs and renovations are minor and don’t affect the livability of the property. For more extensive renovations, you may need to consider a different type of loan.
What is the VA funding fee?
The VA funding fee is a one-time fee that is charged to the borrower and helps offset the cost of the VA loan program. The amount of the fee depends on several factors, including your military status, the amount of your down payment, and whether this is your first VA loan.
How long does the VA loan process take?
The VA loan process can take anywhere from 30 to 60 days, depending on the complexity of your application and the responsiveness of the various parties involved.
Can I use a VA loan to buy a home outside of the United States?
No, VA loans can only be used to purchase a home within the United States and its territories.
Can I use a VA loan to buy a condominium?
Yes, you can use a VA loan to purchase a condominium as long as the complex is VA-approved. You can search for VA-approved condos on the VA’s website.
Conclusion
VA housing loans can be a fantastic option for eligible veterans, active-duty military members, and surviving spouses looking to purchase a home. With favorable terms, no down payment requirements, and flexible credit requirements, VA loans can help make the dream of homeownership a reality. However, it’s important to understand the rules and regulations surrounding VA loans before making a decision. We hope this article has provided you with the information you need to make an informed choice about whether a VA loan is right for you.
If you have any questions or need assistance with the VA loan process, don’t hesitate to reach out to a VA-approved lender in your area. They can help guide you through the process and answer any questions you may have.
Closing
While we have made every effort to ensure the accuracy and completeness of the information in this article, we cannot guarantee that all information is up to date or applicable to your specific situation. This article is for informational purposes only and should not be construed as legal or financial advice. Before making any decisions regarding a VA housing loan, it’s important to consult with a qualified professional who can advise you based on your specific circumstances.