Savvy Homebuyer
Educating First-Time Homebuyers
VA Home Loan
Military Homebuying and The 0% Down VA Home Loan
The 0% VA Home Loan is a great benefit of military service. Typical home buyers take years to save for the 3.5% required to buy a house. The VA Home Loan allows active duty military members and Veterans to buy a home for significantly less upfront cost.
Considering buying a home with your VA Loan? Here is everything that you need to know about your VA Loan.
Benefits
The VA loan allows eligible homebuyers to finance a home with no down payment, no mortgage insurance and lenient credit requirements.
- No Down Payment: Purchase a home with no down payment, eliminating the need for a big upfront payment.
- Lower Interest Rates compared to other loans, that result in potential long-term savings over the life of the loan.
- No Private Mortgage Insurance (PMI): Unlike other loans, VA loans do not require private mortgage insurance, further lowering monthly costs.
- Flexible Credit Requirements: VA loans have more lenient credit score requirements compared to traditional loans.
- No Prepayment Penalty: VA loans allow borrowers to pay off their mortgages early without any fees or penalties.
Eligibility and Requirements
If you are on active duty and you’ve served for at least 90 continuous days (all at once, without a break in service), you meet the minimum active-duty service requirement for your VA Home Loan. Eligibility requirements for Veterans are tied to branch and years of service. You can verify your exact requirements on the US Department of Veterans Affairs Website.
Our team can confirm your eligibility and requestion a copy of your Certificate of Eligibility once you have completed our 60-Second Buyer Eligibility Approval.
Choosing Your Mortgage Lender
Choosing the right mortgage lender is critical to getting good lending terms and maximizing the benefits of your VA loan. Savvy Homebuyer® has partnered with Pay-it-Forward Home Loans®, powered by New American Funding to service our military homebuyers. New American Funding is one of the top #15 VA Home Loan providers in the country. With the power of our team behind you, you’ll receive the support that you need to navigate the loan process seamlessly.
Application Process
60-Second Buyer Power Approval
Start by completing this quick questionnaire to start the homebuying process.
**We do not pull credit with this questionnaire.
Loan Application & Document Review
Then, you will need to complete a full loan application. In addition, you will also provide specific financial documents such as:
- Certificate of Eligibility (COE)
- military service records (DD Form 214)
- proof of income (pay stubs, LES forms)
- Bank statements
- Tax returns, and Identification documents.
In the meantime, start to gather these documents now so they are ready when you need them.
Pre-qualification and House Hunting
After your VA mortgage lender has issued your pre-qualification letter it is time to house hunt! Your Savvy Homebuying Agent will provide you with a list of homes in your area that are eligible for VA Financing. And you will begin setting up times to tour the houses.
VA Certificate of Eligibility
During your purchase, the VA will require a copy of the Certificate of Eligibility (COE) to verify that you meet the criteria for a VA home loan. Providing this certificate also confirms that you have met the required military service requirements. The COE serves as proof of your entitlement to the benefits of the VA loan program. Typically, your VA-approved lender will assist you in getting your COE once your application is complete.
Purchase Contract, Underwriting, Appraisal & Closing on Your New House
Purchase Contract
It’s important to know that the type of loan that you are using will be written in the offers that you write. This is why it is so important to work with a real estate agent who understands the VA Home Loan. It will be your agent’s responsibility to ensure the terms of your contract are acceptable with VA Lending Guidelines.
Underwriting
Your VA mortgage lender will use the purchase contract, your home loan application, and personal documents to underwrite your loan. During this time your lender will likely ask for updated bank and financial statements. Your lender may also ask you to clarify any oddities in your file with a Letter of Explanation. This is normal and should not be concerning to a military homebuyer in underwriting.
Appraisal
The VA appraisal is a crucial step in the VA home loan process, completed by a VA-approved appraiser. For the VA Loan to cover 100% of your purchase, the appraisal value must be at or above your agreed purchase price. The appraisal helps protect the VA ensuring that the home is worth the amount being financed. The appraiser will also confirm that the home is in a safe and livable condition.
What happens if an appraisal comes in below the agreed purchase price? (aka Tidewater)
In the event that the home does not appraise for the purchase value in a VA home loan transaction, it can create challenges. If the appraised value is less than the purchase price the borrower has 3 options:
1- Renegotiate the purchase price with the seller
2- Make up the difference in cash
3- or explore other options such as appealing the appraisal or seeking a second opinion.
It’s important to work closely with your real estate agent and lender to find the best solution in such situations.
Closing On Your New Home
Once you have full loan approval it is time to sign loan documents to fund the VA Loan. This is when your mortgage professional with coordinate with a notary in the area to sign your loan documents. Your lender will provide wire information for any funds that you are responsible for to close the home.
Cost of Using the VA Home Loan
Funding Fee
The VA funding fee is a one-time fee required by the Department of Veterans Affairs (VA) for most VA home loans.
The fee can be financed into the loan or paid upfront. The VA Funding fee is waived for certain Veterans who meet the requirements outlined by the VA. Consult the VA website to see if your fee can be waived.
The VA Funding Fee is a percentage of the loan amount. The fee varies based on factors such as the type of service (regular military, National Guard, or Reserves) and whether it’s the borrower’s first or subsequent use of a VA loan.
Closing Costs
VA loan closing costs are the fees and expenses associated with finalizing a VA home loan. These costs typically include appraisal fees, credit report fees, title insurance, recording fees, and other third-party charges. While VA loans generally have lower closing costs compared to conventional loans, borrowers may still be responsible for certain fees.
The VA does place limits on the closing costs that lenders can charge.
Specialty Home Loans For Veterans
Renovation or Rehabilitation
The VA Renovation Home Loan, also known as the VA Rehabilitation Loan, is a specialized program that allows the borrower to wrap the costs of home upgrades into the VA Loan.
Military borrowers can finance a wide range of upgrades, such as structural repairs, and energy efficiency upgrades. etc. A borrower can not use this program for luxury upgrades such as putting in a pool.
Buying Land and Building A Home
One-Time Close Construction Loan
If you want to buy land and build instead the One-Time Close VA Construction Loan offers a unique financing option. It combines the benefits of a VA loan with the ability to build a new home on privately owned land. Eligible Veterans can secure the financing for both the construction phase and the permanent mortgage in a single transaction.
This eliminates the need for separate loans and multiple closings, streamlining the process and reducing costs.
VA Loan Refinancing
It is important to note that eligible Veterans can replace their existing VA loan with a new loan that offers better terms with a VA Loan Refinance. This program allows you to lower your interest rate or cash equity out of your home. While refinancing may involve closing costs, the potential savings and access to cash can make it a valuable financial strategy for qualified VA borrowers.
Not a commitment to lend. Additional terms and conditions apply. New American Funding is not affiliated with or endorsed by any government entity or agency, including USDA, HUD, or VA. Headquarters: 12312 Olive Blvd Suite 240, St. Louis, MO 63141. For licensing information, go to: www.nmlsconsumeraccess.org.
Content, including images, displayed on this website is protected by copyright laws. Downloading, republication, retransmission, or reproduction of content on this website is strictly prohibited. Terms of Use | Privacy Policy