The basics of your VA home Loan Benefits in 5 points
The following is a presentation I give at the VA center converted into a quick article. Hopefully it helps clear up any misconceptions Veterans have about how their benefits work, and will get them on the right track to home ownership when ready.
1. A little about me
Our office is located here in Roseville and I grew up in the area. I joined the active duty Army in 1993. I commissioned in the CA National Guard in 2010 and retired as a Captain in 2014. I appreciate the opportunities the military has provided myself and my family. Counselling and educating veterans on all aspects of using their VA loan entitlement is one way for me to keep serving our military community. I began my mortgage career in 2002 and have closed hundreds of VA loans since that time. I consider myself an expert on the VA home loan process.
2. How VA home loans work
A big misconception that we see among veterans is that they think the VA actually loans them the money. In reality, the VA simply guarantees a large portion of the money from the bank, and the VA covers its cost through the funding fee that is on the loan. 100% financing is available through your VA loan entitlement because it removes much of the risk from the lender.
3. Eligibility requirements
Here is a basic breakdown on Eligibility. You must fit into one on the “Eligibility” categories for time in service which can be found on your DD214. You must plan to occupy the property, and the “Credit/Income” categories show some disqualifying factors along with further requirements. These are easier to explain by phone if you have more questions, but should help give a basic idea.
4. The Role of Credit When it comes to VA Financing
Here is a quick breakdown of how lenders will look at your credit. More in depth information can be found HERE, if you are interested in learning more. Basically, the minimum required FICO score to make 100% financing possible is with VA is 550 with a max DTI ratio of 50%, although a higher score will make the loan process MUCH easier. If a veteran does not meet these requirements we can counsel them on how to raise their score. Sometimes it can be as simple as paying down one credit card, or settling a collection account. It is always good to ask first so that we can make sure your actions have the biggest positive effect on your score.
5. Funding Fee breakdown
With a 10% or more service related disability the funding fee is waived
The VA funding fee is pretty straight forward, and can be covered by a credit, or rolled into the loan. If you have a service related disability you may not be subject to any funding fee. The VA IRRRL is a streamline refinance to lower your rate and payment, to use this benefit you must already have a VA loan on the property.
That’s it for the Basics
Hopefully this article has helped you understand the VA home loan benefit a little better. If you would like more information, or would like to see if you qualify for a home loan simply fill out our form or give us a call. If you are local to the Sacramento area we can sit down and review the process and paperwork in person to make sure all of your questions are answered before making the leap to home ownership with this great program.