Is Applying for VA Loans Difficult?

Since its inception, more than 20 million people have utilized the VA guaranteed home loan program to help them afford a home loan at favorable rates. If you’re wondering how to get a VA loan and whether these loans are difficult to acquire, read more about this helpful program for veterans:

The VA Does Not Provide the Home Loans

The Veterans Administration does not provide the funds for home loans. Rather, the loan money is provided by many types of 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 guaranteed home loan program. Many institutions have special departments or specially-trained personnel to help apply for these loans. They can ensure that you understand the steps involved in acquiring the loan.

A Certificate of Eligibility Is Required

VA loans require a Certificate of Eligibility that documents your past or current military service. Lenders with trained personnel that work with the VA home loan program can easily acquire this document. However, in some cases, the applicant must fill out a DD form 26-1880 or other form online or by mail to receive the document.

You Must Have A Reasonably Good Credit Record

Lenders generally require applicants for the VA guaranteed home loan program to have a credit score of 620 or above. This requirement is to ensure that you are able to repay the loan and have a record of repaying your debts.

Certain Income Requirements Apply

You will have to provide documentation regarding your income in order to assure the lending body that you can repay the loan. This information can be in the form of W-2s from your place of employment, two years of past 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 Funding Fee

A one-time funding fee is required to help pay for the VA home loan program. Currently, the funding fee is 2.15 percent if you have a zero down payment. This fee goes down to 1.25 percent if you put a 10 percent down payment on the home. These fees can vary, depending on the type of military service and how often you use your entitlement benefit.

A Down Payment Is Not Always Required

Your military service allows you a certain entitlement toward the amount of the loan. That is, the government will guarantee payment of the loan calculated using the amount of your basic entitlement, which is currently set at $36,000. However, a bonus entitlements may also apply that may allow you to get a home loan up to $417,000, or more, depending on the area. Generally, you can acquire a loan without a down payment up to this amount.

The Home Must Be Appraised

An 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 and not commercial property; electrical and water systems in good working condition and other details. If the property does not appraise at the value of the selling price, the buyer may have to re-negotiate the sale.