There are myriad reasons why VA loans are beneficial and why eligibility for these loans is a must. Lower rates, lower closing costs, no mortgage insurance, no prepayment penalty, and best of all, no downpayment. These basically make the VA Loan Advantage.
And if you are eligible for a VA loan, you can use this financing for a myriad of reasons, too. So, how do you qualify for one? Find out here.
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The Many Uses of VA Loans
The Veterans Affairs guarantees a portion of mortgages called VA loans in order for you to:
- Purchase a home, including a condo unit, a manufactured home. and a modular home.
- Purchase and improve a home at the same time. An example is Native American Direct Loan Program whereby Native American veterans can buy, build or repair their homes located in a federal trust land, as well as lower their existing mortgage rate.
- Refinance an existing mortgage that can be VA (VA Streamline or IRRRL) or non-VA (cash-out refinance).
- Adapt, remodel, or build a home for veteran homeowners with
- Install energy efficiency improvements to your home.
Eligibility for VA Loans
Eligibility for any VA loan starts with a Certificate of Eligibility, which proves that you meet the minimum service requirement. In addition, the VA requires satisfactory credit, sufficient income, and personal occupancy from the borrower.
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Be guided that these are the VA’s general requirements for its guaranteed home loans. Specific income, credit and occupancy requirements will depend on the VA loan you wish to apply for.
For instance, VA purchase and cash-out loans require underwriting including credit check, income and debt-to-income ratio, and appraisal, as well as for the home to be occupied by the borrower.
But credit checks and appraisals are generally not required by the Interest Rate Reduction Refinance Loan. As to the occupancy requirement, you only need to certify that you previously lived in the home.
You must also be an existing VA homeowner to be eligible for an IRRRL but do not have to be one when you seek a VA cash-out refinance.
As to specially adapted housing grants, you must have a service-connected disability that qualifies for such grants, a list of which is accessible
It’s not surprising why credit score requirements and rates vary from lender to lender. These lenders are approved to underwrite and vet these loans to be guaranteed by the VA.
VA home loans will be underwritten and vetted by VA-approved lenders who implement their own guidelines on top of VA-mandated ones. To know more about these eligibility guidelines,
talk to a lender today.