If you have served in the US Military, you are likely eligible for the best programs with the best rates. If someone tells you differently, they do not understand the VA Home Loan Programs available. Purchasing under the VA Home Loan Program is easier, requires no down payment and no monthly private mortgage insurance, and generally provides lower rates than conventional options. Refinancing a VA Home Loan is also easier and better because there typically is no appraisal necessary and often no income verification. You can even pull money out of your equity for repairs, upgrades, or for other needs you may have. Please contact a VA Box Home Loans Advisor today to learn more.
VA Programs Available
There are VA Loan Programs available for No-Money Down Purchasing, VA streamline refinancing (also known as the VA IRRRL Program), VA cashout refinancing, and for the Energy Efficiency Mortgage Program (EEM). The VA Home Loan Program includes both Fixed Rates and VA Hybrid ARM rates.
Here is a basic overview of the programs and benefits:
VA Streamline Refinance Program (VA IRRRL)
If you have a VA Home Loan already, you can take advantage of lower rates and better programs in the market anytime as they become available. With the VA Streamline Refinance Program (also known as the VA IRRRL Program), you can refinance quicker and easier than when you purchased your home. This refinance generally does not require any bank statements, pay stubs, or an appraisal. The three basic requirements are: (1) you are current on your VA Home Loan, (2) The refinance would provide what the Department of Veterans Affairs calls a Net Tangible Benefit for the Veteran, and (3) You have some form of income whether that is retirement, pension, social security or VA Disability Benefit, or income from a job.
With the VA Streamline Program, you will enjoy the following benefits:
- Postpone 2 mortgage payments
- NO Appraisal needed
- NO income or employment verification
- NO minimum FICO score*
- NO UP FRONT payments to lock rates or process your loan
- NO out of pocket costs
- Get escrow refund back from current lender
- Save Money Monthly
- $6,000 available for Energy Efficiency
*Credit Score*: We do not have a minimum FICO score to be approved but we will look at your overall credit if you are below a 620 fico score, and will make a decision based on your total credit profile. Credit Scores will affect rates.
VA Cashout Program
If you have a loan on your home, whether it is a VA Home Loan or not, you can cash out any equity in the home up to 100% of the appraised value. You can use this equity to pay off other debts with higher interest rates, for upgrades and construction projects, or for other needs and purposes. In addition to cashing out your equity, you will also enjoy the benefit of having 1 to 2 months without a payment due and you will receive a refund of your current escrow account. You also can take advantage of the EEM program where you can finance up to $6,000 into the VA Home Loan for energy efficiency upgrades for your home. This program does require a VA appraisal, a pest inspection, and full income verification similar to when you obtained your VA home loan when you purchased the property.
VA Home Purchase Loans
Using the VA Home Loan Program when purchasing your home will provide you with lower rates than conventional programs. You can also enjoy the benefit of having no requirement for a down payment.
Here are the major benefits with the VA Home Loan Program:
- No Down Payment Required
- No Minimum Fico Score Required*
- Yes there will be an appraisal and a pest inspection BUT … Appraisal? Pest Inspection? Yes
- Income Verification? Yes
- Closing Costs? Yes – but they can be financed into the loan OR you can negotiate for the seller to pay them.
Frequently Asked Questions:
How do I qualify for a VA Home Loan? Am I eligible for a VA Home Loan?
- As a US Veteran or someone who is actively serving in the US Military, there are several ways to be eligible for a VA Home Loan.
- Active-duty Veterans with at least 90 consecutive days of service during a major conflict
- Peacetime Veterans and active-duty personnel with at least 180 days of consecutive service
- National Guard or Reserve members who have more than six years of service, unless otherwise eligible
- Spouses of service members who died in the line of duty or as a result of a service-related disability.
Here is a list of those that are generally eligible for a VA Home Loan:
What are the differences (Pros/Cons) of a VA Home Loan
- For most that are eligible, VA Home Loans are the most beneficial and least expensive mortgage program available. For VA Home Loan Purchases, there is no required down payment, no out of pocket required up front, and no monthly mortgage insurance. When refinancing your VA Home Loan, you can roll any costs into the loan, there is often no appraisal required, you can defer up to 2 months of mortgage payments, you’ll get your escrow refunded back to you, and you’ll take advantage of the fact that VA Loan rates tend to be lower than conventional rates.
- However, there are times that a conventional mortgage is the better option. For example, if you have 20% to put down, you would be able to avoid any mortgage insurance. Your rate may be a bit higher than a VA Home Loan rate, but you may be able to avoid the expense of the VA Funding Fee by using a conventional loan. Additionally, because you can only use a VA Home Loan to purchase your primary residence, you would also need to look to other loan programs when purchasing an investment or vacation home.
Bad Credit – Can I still get a VA Loan with bad credit?
- Generally, YES. This is up to the lender. The VA Guidelines do not have a minimum fico score or credit history required. Most lenders want to make sure that lending money out to someone is a good credit risk. So the lenders will look at the full credit history if your credit score is below 580 and the lenders will be hesitant to loan out money if you have active judgments on your credit report. That said, most lenders do have minimum fico score requirements and your credit score will affect what rate and program you can get approved for.
Bankruptcy – Can I still get a VA Loan if I filed bankruptcy recently?
- Generally, YES. This is up to the lender. The VA Guidelines do not have a minimum amount of time that you need to wait after a bankruptcy, but most lenders do. With Chapter 13, as long as you get written approval from the trustee, many lenders will approve a refinance or purchase. With a Chapter 7, many lenders require 1 to 2 years to pass after the discharge before approving a VA Home Loan.
How do the VA Rates compare against Conventional Rates?
- Rates for VA Home Loans are generally lower than those that are available for conventional mortgages.
What is the history of the VA Home Loan Program?
- As a reward for those who serve our country, the VA Home Loan Program was established in 1944 as part of the GI Bill (also known as the Servicemen’s Readjustment Act), and allows Veterans to purchase or refinance a home with greater ease and with exceptional benefits.
How are the VA Loan Rates Determined?
- Similar to rates for other programs, the rate is determined by the market and other economic factors. The Department of Veterans Affairs does not issue loans nor do they issue rates for the VA Home Loans. The Department of Veterans Affairs guarantees the loans and issues base guidelines that lenders can then create more restrictive guidelines in determining who to loan money to. However, because the Department of Veterans Affairs will guarantee VA Home Loans with broader standards than other home loan programs, lenders are generally very willing to lend money to Veterans under the VA Home Loan Program.
What are some tips to getting a low rate on your VA Home Loan?
- The major variables that influence the rate that you are timing and your credit. Because the market along with other economic factors determine the rates, catching the rate at a time when the interest rates are low is the biggest factor to helping you get a low rate for your VA Home Loan. Your credit score and credit history also affects the rate. Although there are VA home Loans available without a minimum fico score requirement, lenders will offer better rates for those borrowers that they determine to be lower credit risks.
What type of homes can be purchased with a VA Home Loan?
- Veterans are able to purchase most types of homes using a VA Home Loan, including houses, town houses, condos, etc. The basic requirement when purchasing a VA Home Loan is that the borrower must have the intent to occupy the property. Here is a website that shows a more detailed list of VA Approved properties. https://vip.vba.va.gov/portal/VBAH/VBAHome/condopudsearch
What is the Energy Efficiency (EEM) Program? How does it work?
- This program allows you to make home improvements to your home when you are purchasing or refinancing under the VA Home Loan Program, as long as the improvement is one that improves the energy efficiency of your home. Essentially, the VA is willing to allow you to finance the cost of your energy-efficiency upgrade, up to $6,000, so you don’t have to pay for it out of pocket. Some examples of the upgrades may include: heat pumps, thermal or storm doors and/or windows, furnace or air conditioning units, water heater insulation, clock thermostats, solar cooling or heat systems, etc.
Am I eligible for the VA Loan Benefit as the surviving spouse of a deceased veteran?
- Yes, a surviving spouse of a veteran who died while on active duty or as a result of a service-related disability generally is eligible for a VA Home Loan.
Does the Department of Veterans Affairs loan money directly?
- No. This is a common misconception. The Department of Veterans Affairs guarantees the loan but does not loan out the money directly. Private lenders, brokers and banks lend out the money and the Department of Veterans Affairs guarantees the loans in case of default. Accordingly, there are some differences in VA lenders and brokers because they often put additional standards and requirements (referred to as “overlays”) or pre-requisites that must be satisfied before granting a loan.
What is the process for obtaining a VA Home Loan?
- The process for obtaining a VA Home Loan, whether purchasing or refinancing, is similar to the home loan process with other loan programs, except better. Start by calling us at 855-660-0002 click the “apply now” button at the top of the page. Doing a loan with us is quicker and easier because it is automated, internet based, and we offer notary and currier services for those that prefer to have someone personally come to your home for documents.
How much can I borrow with a VA Home Loan?
- The VA does not have a limit on how much you can borrower to finance your home. However, the VA limits the amount that they will guarantee based on your basic entitlement. Please contact us to find out how much your VA Home Loan entitlement is.
VA Loan Entitlement/Can I qualify for a second VA Home Loan if I already have one?
- Most of the time the answer is yes. If a veteran has a current VA Loan that is using up his or her eligibility, any partial remaining eligibility would still be available to be used on another VA Home Loan. The best way to figure out how much eligibility you have remaining is to contact a VA Loan Specialist and provide them with the information needed to obtain a certificate of eligibility for you that will show your remaining eligibility.
What are the costs associated with a VA Home Loan?
- The good news is that the costs can generally be rolled into the loan so you don’t have to pay anything out of pocket. Additionally, if you price your rate correctly, or negotiate your purchase contract with the seller paying the closing costs, you can structure the loan so there are no closing costs for you since someone else will be paying them. However, the closing costs typically include a credit report, the VA funding fee (unless you are exempt from this), the costs for the title report and insurance, any cost or rebate for the rate and program selected, any costs for an appraisal or pest inspection (for full doc files), and the amount that is necessary to establish a new escrow account and pay any taxes or insurance that is due.
What is the VA Funding Fee?
- The VA Funding Fee is the fee that the Department of Veterans Affairs charges on every VA Home Loan that is established. The Department of Veterans Affairs uses this money to guarantee the VA Home Loan. For Streamline Refinances (VA IRRRL), the VA Funding Fee is 0.5% of the loan amount. For VA Home Loans used for Purchases or for VA Cashout Home Loans, the VA Funding Fee ranges from 1.25% to 3.3% of the loan, depending on the type of loan and the amount of money put down at closing when purchasing a property. However, the VA Funding Fee can be, and is generally financed into the loan rather than paid for at closing. The only Veterans that are exempt from the VA Funding Fee are generally those that receive VA Disability Benefits.