Being active duty or a veteran means that you can enjoy special home ownership benefits. It’s important to know what programs are available to you so you can take advantage. Foreclosure rates are lowest among VA loans, despite 9 out of 10 VA loans having $0 down. What do you need to know about the program?
You can get a home for $0 down!
The biggest appeal of VA loans are the 0 down program. This is a huge advantage to buying a home. Other programs, like FHA, require 3.5% down at the lowest, and you have to meet certain income requirements for those programs. Conventional loans generally start at a 5% down payment. For the average $220,000 home in Hampton Roads, you’d be looking at putting down at least $7,700 on an FHA loan!
What’s a Certificate of Eligibility and how do I get one?
The COE(Certificate of Eligibility) is the document required to begin the process in VA loans. You can obtain one from your lender. One of the following requirements must be met to obtain a COE:
- 181 days of service during peacetime
- 90 days of service during war time
- 6 years of service in Reserves or National Guard
- Surviving spouses of members who died in the line of duty may be eligible
It is not a one time deal.
You can get more than one VA loan. In fact, you can use the VA program again after foreclosure, and even while you have an active VA loan! It’s a safe loan, with no mortgage insurance required.
Are they limited?
In the Hampton Roads, you have $458,850 as your limit for the $0 down program. What that means is you can buy a property up to that purchase price with no down payment. It also means if you currently have a VA loan for $200,000 and are looking to purchase a new home, you can still use the $0 down program to purchase a home up to the remainder of the limit ($258,850). This is not a lifetime limit. It only applies for active VA loans. If you sell your home or refinance, you will be able to use the VA $0 down program again.
Your credit doesn’t have to be as high.
Typically for VA loans, your credit can be much lower than for a conventional loan. If you have a score around 620 you should be able to qualify. Obviously it depends on your circumstances and your credit history, and your lender (don’t have one? contact me for recommendations in the area!).
You can buy again quicker after bankruptcy or foreclosure!
Anyone can have credit issues, leading to bankruptcy and foreclosure. If you’re active duty or a veteran, you can qualify for a VA loan as soon as 2 years after declaring bankruptcy. You can still even qualify again for the $0 down program!
What’s in an appraisal?
Since VA loans are government backed, the property has to meet certain requirements to qualify for the program. Lenders do not want to finance you more than the home is worth, and the government doesn’t want to back that loan. There are also more stringent requirements for the home to be acceptable. Lead based paint must not be peeling, no water or termite damage, heating and electric need to be adequate and functional, and the roof must be in good condition. With that in mind, a good real estate agent should only be showing you properties that qualify for VA loans if you are a VA buyer.
You must live in the home you buy.
There are occupancy laws for VA loans. Just like an FHA loan, you must occupy the property you purchase. This means you can not use the home as an investment or a vacation property. You (or your spouse) must be able to occupy the property within 60 days of close. Special circumstances can afford you up to 12 months before you must occupy the property, such as retirement, repairs to be made, or unusual situations. If you are an out of state buyer, PCSing to Hampton Roads, you could close on your home 2 months before you actually move here. I often work with out of state buyers, and am familiar with going through the entire VA loan process with a spouse or trusted friend.
How to chose a lender?
There are big name lenders out there tied to VA loans, and a lot to chose from. I work with several local lenders whom I trust and have direct contact with. As a real estate agent, it’s important to me that you, as my client, have a good lender. Nothing happens for anyone until we close, and the wrong lender can cause closing delays or even cause contracts to completely fall apart. A good lender will be available to answer your questions at any time, and help you every step of the loan process. They can even work their magic to get debt pay-down worked into your loan! If you would like a lender to contact you to begin discussing your VA loan, simply contact me today!