With no down payment or mortgage insurance premium, VA loans are an exceptional financing option for military veterans.
Because a portion of the loan is guaranteed by the US Department of Veterans Affairs, lenders are able to offer more relaxed guidelines, lower interest rates, and there is no down payment required. VA loans are available for primary residences only and this benefit may be used repeatedly over time. There are also VA refinancing programs.
ON LOAN AMOUNTS UP TO $484,350
VA loans require a 560 minimum credit score and allow debt to income (DTI) ratios up to 45%. This is your monthly gross qualifying income compared to your debt load and new house payment. In some cases, the DTI can go as high as 65% with excellent credit.
VA loans require a Certificate of Eligibility (COE) from Veterans Affairs to determine eligibility for the loan. A loan cannot be issued without a COE in the borrower’s name.
There is a funding fee on all VA loans. The fee is dependent on how many times a veteran has used their benefit. The first-time usage fee is 2.15% of the loan amount. The subsequent usage fee is 3.3% of the loan amount. This fee can be rolled into the loan amount and is waived for disabled veterans.
Veterans can use use this benefit for multiple home purchases over time. You can only ever have one existing VA loan on a property at any given time because this benefit can only be used for a primary residence.