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Since its inception, more than 20 million people have used the Secured Home Loan Program to help victims afford the cost of a home loan at affordable rates. If you’re wondering how to get a VA loan and whether these loans are hard to come by, read more about this helpful program for veterans:
The Department of Veterans Affairs does not provide home loans
The Veterans Administration does not provide funds for home loans. Instead, the loan funds are provided by several lenders who participate in the program and know its requirements. If you are looking for a mortgage for a new home, always ask the lender if they participate in the VA Secured Home Loan program. Many institutions have special departments or specially trained staff to assist in applying for these loans. They can make sure you understand the steps involved in getting the loan.
Certificate of eligibility required
VA loans require a Certificate of Eligibility that documents past or current military service. Lenders who have trained personnel working with the VA Home Loan Program can easily obtain this document. However, in some cases, the applicant must fill out DD Form 26-1880 or another form online or by mail to receive the document.
You must have a reasonably good credit history
Lenders generally require VA secured home loan program applicants to have a credit score of 620 or higher. This requirement is to ensure that you are able to repay the loan and have a record of paying off your debts.
Certain income requirements apply
You will have to provide documentation regarding your income in order to assure the lending authority that you can repay the loan. This information can be in the form of W-2s from where you work, two years of previous income tax forms if you are self-employed, as well as receipts from your military pension or other sources of income.
You will pay a one-time financing fee
A one-time financing fee is required to help pay for the VA Home Loan Program. Currently, the finance fee is 2.15 percent if you don’t have a zero down payment. This fee drops to 1.25 percent if you make a 10 percent down payment on the home. This fee can vary, depending on the type of military service and how often you use your entitlement benefits.
Down payment is not always required
Your military service entitles you to a certain entitlement in the loan amount. That is, the government will guarantee repayment of the loan calculated using your base benefit amount, which is currently set at $36,000. However, bonus benefits that may allow you to take out a home loan of up to $417,000, or more, may also apply depending on the region. Generally, you can get a loan with no down payment up to this amount.
The house must be appraised
The appraiser must physically visit the property and determine its market value, based on the structure itself, as well as other homes in the area. The VA provides a list of minimum property requirements that must be included in the appraisal report. These requirements include adequate living quarters; whether it is a residential rather than a commercial property; Electricity and water systems are in good working condition and other details. If the property is not valued at the sale price, the buyer may have to renegotiate the sale.
