Do I qualify for a VA loan?

There are a number of different mortgage options that you may want to look at if you’re seriously considering the purchase of a new house. Regular loans often have unfavorable terms depending on the buyer’s credit rating. For example, these loans may require larger down payments, higher interest rates and the payment of monthly mortgage insurance. However, specialty mortgage loans, such as the VA loan, could help you to secure more favorable terms.

What are VA Loans?

VA (Veterans Affairs) Loans were created specifically to help veterans, service members and surviving spouses to become homeowners. Over 21 million people have been assisted by the VA Loan program. The following are a few of the benefits of VA Loans:

  • Lower than normal interest rates that aren’t nearly as dependent on credit scores as standard mortgage loans are.
  • The removal of down payments in many cases.
  • The removal of mortgage insurance (typically, you have to pay for mortgage insurance if you don’t provide a down payment of at least 20 percent)

Are you qualified for a VA Loan?

Those that are eligible for VA Loans have VA Loan entitlement. VA Loan entitlement is a specific amount of money guaranteed by the Department of Veterans Affairs. It’s that entitlement that provides lenders with the confidence to provide VA Loan financing with such favorable interest rates and terms.

In order to be eligible for a VA Loan, you must meet one of the following conditions:

  • You’ve served for at least 90 days consecutively during wartime.
  • You’ve served at least 181 days during peacetime.
  • You’ve served at least six years in the Reserves or the National Guard.
  • You were married to a service member who died in the line of duty or who died as a result of a service-related disability.

Even if you’ve met one of these conditions, you will also need to meet the following requirements to be eligible:

  • You will need to obtain a Certificate of Eligibility to provide to your VA approved lender in order to verify your eligibility for a VA Loan.
  • Only certain properties will be eligible to be purchased using a VA Loan. Almost all single-family homes are eligible. However, some condominiums and townhomes are not eligible – the entire complex must be approved by the VA before you can finance a condo or townhome using a VA Loan. Manufactured homes can be difficult to secure financing for as well since they are considered depreciating property.
  • You will need to meet basic credit and income requirements. Your credit score will need to be at least 620. You will also need to have a debt-to-income ratio of at least 41 percent. Both of these requirements are much less strict than regular mortgage loans.

VA Loans in Maryland, Virginia, & Washington, DC

A VA Loan can be a great way to obtain financing at favorable terms for your new home as long as you qualify. For information on obtaining a VA Loan or any other type of home mortgage loans, be sure to contact Alex Encheandia today.

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