VA Loan vs. Traditional Mortgages
Military homebuyers have access to one of the most unique and powerful loan programs ever created. See how the VA Loan compares to a traditional home mortgage:
|VA Loans||Conventional Loans|
|0% Down(for qualified borrowers)VA Loans are among the last 0% down home loans available on the market today.||Up to 20% DownConventional loans generally require down payments that can reach up to 20% to secure a home loan, pushing them out of reach for many homebuyers.|
|No PMISince VA Loans are government backed, banks do not require you to buy Private Mortgage Insurance.||PMI RequiredPrivate Mortgage Insurance is a requirement for borrowers who finance more than 80% of their home’s value, tacking on additional monthly expenses.|
|Competitive Interest RatesThe VA guaranty gives lenders a greater degree of safety and flexibility, which typically means a more competitive rate than non-VA loans.||Increased Risk for LendersWithout government backing, banks are taking on more risk which, in turn, can result in a less-competitive interest rate on your home loan.|
|Easier to QualifyBecause the loan is backed by the government, banks assume less risk and have less stringent qualification standards for VA Loans, making them easier to obtain.||Standard Qualification ProceduresConventional options hold stricter qualification procedures that can put homeownership out of reach for some homebuyers.|
VA Home Loan Eligibility Requirements
Through dedicated service to our country, military service members and veterans qualify for a range of benefits. Chief among those is an opportunity to take part in the VA Loan program – a mortgage option that provides the opportunity for qualifying veterans to purchase a primary residence without putting any money down towards the sale price of the home.
While the VA Loan is designed specifically for those who served, there are a handful of requirements. In order to qualify for a VA Loan there are specific service conditions each borrower must meet.
You may be eligible for a VA Home Loan if you meet one or more of the following conditions:
- You have served 90 consecutive days of active service during wartime,OR
- You have served 181 days of active service during peacetime,OR
- You have more than 6 years of service in the National Guard or Reserves,OR
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
Obtaining your Certificate of Eligibility (COE)
Soldier To Soldier Hawaii can assist in obtaining your VA Certificate of Eligibility (COE) from the VA as your partner for your home financing needs.
While you don’t need your COE in hand to start the loan process with Veterans United, this certificate is a very important part of your loan application. Your COE verifies that your length and character of service make you eligible to use the VA home loan benefit.
If you’d like to get an early start, VA Loan applicants can fill out a Certificate of Eligibility (VA Form 26-1880). The form can be downloaded through the Veterans Administration Web site and mailed directly to the VA. More information about Certificates of Eligibility can be found at http://benefits.va.gov/benefits/.
VA Loan Income Requirements
Homebuyers interested in the VA Loan aren’t required to reach any kind of income threshold to use their home loan benefits; however, borrowers are expected to have stable, reliable income that will cover monthly expenses – including their new mortgage payment.
Additionally, the VA requires that borrowers maintain a certain amount of income left over each month after all major expenses are paid. The excess is meant to cover typical family needs, such as food, transportation and so forth and is referred to as residual income. Residual income is a large reason why the VA Loan maintains one of the lowest foreclosure rates of all major lending options.
By enforcing residual income requirements, the VA increases the chances of its borrowers earning sufficient income to meet all financial obligations, and also ensures borrowers have a cushion in the event of an emergency.
Additional Eligibility Requirements
Although the VA determines the guidelines for those who are eligible for the VA Loan benefit, private lenders who finance the home purchases have an additional set of criteria a potential borrower must satisfy, including debt, income and credit requirements
Your path to homeownership:
Getting started at Veterans United is as simple as filling out our quick and secure contact form. Once you’ve completed our contact form, one of our VA Loan specialists will reach out to you to discuss your unique situation, your objectives and how we can help you prequalify for a home with Veterans United.
Prequalifying is important because it gives you an estimate of how much home you can afford while laying a foundation for the financing process moving forward. Our VA Loan specialists will be able to tell you immediately whether or not the VA Loan is a right fit for you at this time or not.
Even if you aren’t sure of your credit, don’t worry, we have the resources in place to guide you on your path to financing your home.
The next step in your VA Loan financing is getting preapproved. At this stage, you’ll receive a preapproval package of documents that contains everything you need to obtain a VA home loan.
Meeting Conditions in a Preapproval Letter
Receiving your preapproval letter is an exciting step, but there’s a little more work to do. Your VA Loan specialist will identify a list of conditions that must be satisfied in order to finalize your VA Loan paperwork. All of the conditions listed in the letter are important and your financing can fall apart if any of them aren’t met.
Examples of documents required in your preapproval process
- Pay Stubs
- Tax Returns and W2s
- Employment History
- Bank/Investment Statements
- Evidence of Real Estate Asset
Making an Offer
When you find that perfect home, it’s time to make an offer and negotiate a contract with the seller. It’s important that your real estate agent know the ins and outs of the VA Loan so they can structure the contract to assure you retain the ability to put no money down if you so choose.
Once Veterans United receives your loan paperwork, your loan officer will use a copy of your DD-214 to obtain your VA Certificate of Eligibility from the VA. The Certificate of Eligibility details a prospective borrower’s entitlement and ability to participate in the VA Loan program. Our work as a dedicated VA lender means we can electronically request the Certificate of Eligibility, which saves you time and helps keep the process running smoothly.
Processing & Closing
Now that you’ve found a home, it’s time for your loan officer to order an appraisal for the property. The VA requires homes to be move-in ready and any problems with the property generally have to be corrected by the seller before a loan closes.
Once you’re under contract to purchase a home, your loan documentation will go to an experienced underwriter for review. The underwriter will verify financial information and other documents and request additional items as needed. It is the underwriter’s job to ensure that everything is accurate and meets VA guidelines. Once the loan is approved, a closing date will be scheduled. At closing, you’ll sign paperwork, finalize your VA Loan and take ownership of your new home.