Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.
Here's how it works:
- 100% financing without private mortgage insurance or 20% second mortgage.
- A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA. Vets with a service related disability may have the funding fee waived.
- When purchasing a home, veterans may borrow up to 100% of the sales price or appraised value of the home, whichever is less.
- When refinancing a home, (whether to get cash out or to lower the rate/payment)veterans may borrow up to 100% of appraised value in order to refinance where state law allows.
Here are some unique features of a VA Mortgage
- 100% Financing Available for purchase & Rate & Term or Cash-out Refinances on loans up to $417K
- Must be able to obtain a Certificate of Eligibility from the Veterans Affairs office. (We will request if the borrower provides us with their DD214)
- VA Funding Fee may be waived if the Veteran has a service related disability
- 620 Minimum FICO score for Purchase Transactions
- 640 Minimum FICO score for ALL Refinance Transactions
- No reserve requirements (May be a compensating factor)
- No Appraisal program available for VA to VA Refinances (IRRRLS)
- No Minimum Reserve Requirements (Except in dealing with multiple units and rental properties)
- No Monthly Mortgage Insurance (Even with less than 20% down)
- 36 Month Seasoning Required for past Foreclosure or short sale (Start from foreclosure sale date)
- 24 Month Seasoning Required for a past Bankruptcy. (Start from discharge date)
Reasons to consider a VA Mortgage
- Borrower is a qualifying veteran
- Borrower does not have 20% to put down
- Generally lower rates than conventional mortgages