VA Mortgage Loans: The Facts

When looking to take out a mortgage, one of the best options available to those with a military background and who qualify is a VA loan. If you are unaware of whether you qualify for a VA loan, or you’re wondering what the application process entails, here are the answers you’re looking for.

How Do I Get Pre-Approved For A VA Loan?

The pre-qualification process is a good way for borrowers to correct any potential red flags that could slow down their loan application process. The whole process itself is fairly straightforward, and it’s completed over a few easy steps. After getting in contact with a VA-approved lender, you will be asked several questions over the course of about 10 to 15 minutes to determine your purchasing power. The lender will then go on to perform a hard inquiry credit check. Lenders may ask questions about:

· Past and present employment

· The amount you want to borrow

· Monthly income

· Previous homeownership

· Debts you have

· Assets you own

D. Shane Whitteker is the owner and chief broker at Principle Home Mortgage in State College, Pennsylvania. He specializes in helping his clients through each step of the VA loan process.

“The pre-approval process is basically a mortgage application, a credit pull and income documents. Sometimes this gets more complicated based on the client,” Whitteker says. “The time frame is typically 24 hours or less for an easy candidate. Those with a more complicated scenario like being self employed or having credit issues can expect the process to take longer.”

Do Pre-Approvals Hurt Your Credit Score For A VA Loan?

During the pre-approval process, a credit check will have to be undertaken. According to Whitteker, unlike other credit checks, as long as your credit is pulled within a specific period of time your score won’t take a hit.

“Typically one credit pull is not going to have a negative impact on your credit score,” Whitteker says. “When shopping for a mortgage you are allowed to have your credit checked within a two week timeframe and not have negative impacts from the multiple credit pulls. This does not hold true for other forms of credit checks.”

How Do I Know If I Qualify For A VA Loan?

In order to qualify for a VA loan, you first need to prove that you meet the necessary service requirements.

“The VA offers a certificate of eligibility for those that qualify,” Whitteker says. “Your local mortgage broker can typically pull this if they are authorized to originate VA mortgages.”

Requirements for a VA mortgage loan include:

· 181 days of active duty were served during peacetime,

· 90 days of active duty were served during war time,

· 6 years were served in the National Guard or the Reserves, or

· You are a widow or widower to a spouse killed in the line of duty

How Long Does it Take to Get Approved for a VA Loan?

While it may differ from person to person depending on the circumstances of the loan, it shouldn’t take any longer to get approved for a VA loan than it would a conventional mortgage. If everything goes smoothly, the start of the approval process should be completed within 24 hours. Whitteker says the entire process from start to finish generally takes 30 to 45 days for a VA loan.

Who Pays Closing Costs On A VA Loan?

"The VA allows the seller to cover the closings costs on a VA mortgage,” Whitteker says. “Anything not covered by the seller is paid by the borrower.”

Closing costs of a VA loan tend to average about 3% to 5% of the loan amount.

What Is The Minimum Credit Score For A VA Loan?

"The VA doesn’t actually set a minimum credit score, this is left up to the bank,” Whitteker says. “The VA does however have minimum credit requirements in relation to delinquency and credit history.”

What Are The Perks Of A VA Loan?

According to Whitteker, the benefits of a VA loan boils down to money saved by the prospective home owner.

"VA rates are low compared to conventional mortgages and there is no monthly mortgage insurance. For veterans that receive disability the funding fee is waived as well.”

· VA loans require no down payment for most eligible borrowers.

· No mortgage insurance is required for VA loans

· VA loans come with a government guarantee

· Prepayment penalties aren’t allowed with a VA loan

· VA loans come in a wide range of varieties to fit your needs

· VA loans are easier to qualify for and are more flexible than other types of loans

· Funding fees are typically very low

· VA loans are assumable, meaning it can be transferred to a future home buyer should they be eligible

What Is The Maximum VA Loan Amount?

Having a local mortgage broker is important when navigating the mortgage process – and a VA loan is no different. According to Whitteker, the maximum VA loan amount can vary.

“This depends on your location,” Whitteker says. “It is important to check with your local mortgage broker on this since this varies based on state and county."

Can I Build A House With A VA Loan?

It is indeed acceptable to build a house with the help of a VA loan, however Whitteker cautions that not every lender offers this program.

Can I Get a VA Home Loan Without a Job?

While employment is not a requirement for taking out a VA loan, it is necessary to at least have some kind of steady income. For example, it’s possible to receive a VA loan if other sources such as retirement income or disability payments are your main form of income. If you are employed, it is worth noting that it’s possible to get a VA loan with fewer than two years on your current job but you will need a two year history overall.

Can I Have Two VA Loans?

It is a somewhat rare occurrence, however it is possible to carry more than just the one VA loan. If you’re an eligible borrower with full VA entitlement, you could be entitled to as much as $424,100, and with the average VA loan being around $210,000, this means that most veterans would have some remaining entitlement to take advantage of should they wish to.

“Yes, this is possible as long as you meet the guidelines and have enough available 'guarantee' from the VA,” Whitteker says. “Most of the time you will need to make a down payment on the 2nd home."

Whitteker says there are limits to this, however.

“You can not use this as an option to purchase an investment property or a second home for something like a vacation spot.”

Can You Buy A Fixer Upper With A VA Loan?

“Yes,” Whitteker says. “However, the VA is somewhat limited on what you can do as far as renovations. You can not use this loan for any structural type repairs.”

Veterans looking to buy a fixer upper home will want to look into the VA renovation loan. Where other VA loans would bar you due to the house being in poor condition, with a VA renovation loan, this is not an issue. There are a few requirements of the loan, such as the home having to be move-in-ready, meaning that it must be structurally sound and safe, and sanitary.

Do VA Loans Require a Down Payment?

While the traditional home loan would require a down payment of around 5% to 20%, one of the biggest benefits of a VA loan is that they don’t require any down payment at all. There are caveats, however.

“If the veteran has enough VA guarantee there is no down payment required,” Whitteker says. “There is a specific calculation to figure this out. A veteran that has had a prior VA foreclosure may have to make a down payment but not always. This depends on the sales price.”

To learn more about getting a VA mortgage loan in State College – or anywhere else in Pennsylvania – contact the VA loan experts at Principle Home Mortgage in State College, PA.