VA LOAN FAQ
U.S. Department of Veterans Affairs loan financing is available to eligible veterans to purchase a primary residence. The VA protects the lender in the case that the VA borrower defaults and does not make their mortgage payments. The VA guarantees the loan but, is not the actual lender. The VA loan is provided by a private lender.
There are many benefits and favorable terms offered to a VA borrower that are not available with other types of loans. Lenders tend to be more favorable to the VA borrower, and the loan guidelines are generally more flexible than they are with other types of loans. Here are some of the advantages specific to a VA loan:
- No down payment up to $453,100 (for El Paso County). With a larger loan amount, a small down payment is required
- No mortgage insurance premiums
- No penalty for early pay-off
- Limits on closing costs
- When you sell your home, your VA loan is assumable by another qualified VA borrower
- Only two-year wait to apply for a loan after bankruptcy
- Credit score of 620 or more.
- If the borrower is unable to make payments on the mortgage, the VA can help by negotiating with the lender on their behalf.
Yes, each personal situation is different. Generally speaking, if you have paid off your previous VA loan, your eligibility is opened to you again. Additionally, there may be an unused portion of your eligibility still available to you.
Active-duty military, veterans, reservists and members of the National Guard all have differing minimum service eligibility requirements. An un-remarried spouse of a veteran who died while in service or has a spouse missing in action or prisoner of war is also eligible.
- You can go directly to www.ebenefits.va.gov/ebenefits-portal to determine entitlement and access their Certificate of Eligibility.
- Your VA lender can guide you through your eligibility and can also obtain the actual Certificate of Eligibility for you.
No, the borrower will be prequalified for a VA Loan with their VA lender. The lender will review the borrower’s financial situation to determine the borrower’s ability to take on a mortgage at that time and if so, how much of a mortgage loan the borrower can qualify for. If the borrower’s credit is not good and therefore is not ready for a mortgage, the VA lender can provide advice for the borrower to follow to position themselves to prequalify as well as a timeline estimate to complete the process.
Prequalifying for a loan is a simple analysis by a private VA lender of your income, debt and assets. Our preferred lender makes the prequalification process streamlined and simple and it’s free. For more see GET PREQUALIFIED FOR FREE.
Every borrower’s financial situation is unique which can present challenges in the loan process. A good VA lender can successfully solve those challenges without causing delays to your home-buying process. This can prevent a difficult home- buying transaction for not only you as the buyer, but also the seller and all the representatives involved. Local lenders can have more flexibility and can foresee and circumvent delays. We suggest that you work with a lender who has come highly recommended to you. We have worked with many lenders over the years and have found that there are some excellent local VA lenders. Visit our VA Preferred Lender tab to learn more.
After you have prequalified and have an accepted contract on the home you want to buy, a good VA lender will guide you through the loan process with open communication, helping you every step of the way.
An offer is accompanied with the buyer’s prequalification letter to support the offer amount when presented to the listing agent and seller. The ease of the loan process is one of the keys to a smooth and successful home purchase transaction. It’s typical that a seller will inquire of their agent about the reputation of the lender that the buyer has chosen. In a competitive seller’s market, the buyer’s lender could be a deciding factor as to which offer is chosen.
The buyer pays the VA Funding Fee at time of closing for active duty members and reservists. This fee is to help defray costs of administering the VA Loan Program. The fee may be paid with cash or it may be paid by adding the fee to the loan amount. These following fees apply to active duty members. Reservists generally pay slightly more. “Disabled” members don’t pay any funding fee.
- First VA loan with 0% down payment: 2.15%
- First VA loan with 10% down payment: 1.25%
- Second VA loan with 0% down payment: 3.3%
VA lenders may charge an origination fee that may not exceed 1% or a flat fee which may not exceed 1%.
- Active Duty – A statement of service signed by the adjutant, personnel office or commander of the unit. There’s no particular form for this, but it must be printed on military letterhead.
- Reserve and Guard (honorably discharged) – NGB Form 22, Separation and Record of Service or an annual retirement points summary.
- Veterans – DD Form 214, Certification of Release or Discharge from Active Duty.
If you are paying cash, you can close on your new home in ten days to two weeks, if you wish. If you are obtaining a loan, the loan process takes about 30 to 45 days, depending upon the lender you choose.