For anybody who doesn’t do their fair share of research, loans can be intimidating. With an economy that can fluctuate more than an airplane experiences turbulence, the idea of borrowing a huge sum of money can be scary—especially to someone who will have to keep up with an arrangement that will last for several years.
A borrower will have to prepare in more aspects than one. While it is true that there are numerous loan types for people with varying credit profiles, there is a standout loan program to our friends and families who have served and continue to serve the country and fight for its integrity and power.
The Veterans Affairs home loan is a loan that requires little to no down payment at all. This loan type is exclusive only to veterans and military members alike. Occasionally, this may also be granted to their spouses. That said, even if these loans are insured by the government, the United States Department of Veterans Affairs does not issue checks themselves, nor do they dispose of stacks of cash on their end. They only ensure the mortgage lenders extend, to help mitigate the financial risk involved in transactions like these.
To establish, this whole arrangement was initiated in 1944 to help out military personnel build home equity without having to come up with spectacular credit.
This particular loan program has aided millions of families at this point. A VA mortgage loan continues to be extremely beneficial to service members as many lending institutions and realtors have tightened their qualifications due to a collapse of housing deals in the market in recent years. As an effect, this specific home loan program has been a frequent go-to option for our country’s fighters. But like any other loan, requirements still have to be compiled.
Also, like every other loan present in the market today, the limits of these loans vary by area and are based on county limits. In many counties, a VA loan can permit a veteran to purchase a house pegged at $453,100 with no deposit at all. Still, houses for sale in counties tagged as high-cost areas can be bought at more expensive fees with no down payment, according to the 2017 VA loan limits.
With all that mentioned, is a veteran free from payment obligations altogether?
The answer is no. A Veterans Affairs funding fee will be collected from successful applicants. The amount of the fee will depend on the following: the presence of a paid down payment made by a borrower (if ever), the type of service rendered by the borrower, and if it is the first time a borrower is making use of this benefit. This won’t be a problem, however, as the rate can be integrated into the loan itself and can be paid for along with one’s mortgage fees.
For one to avail of this home loan program, he or she has to meet one qualification mentioned below:
- They have served 90 successive days or active service over wartime.
- They have delivered 181 days of operating service over peacetime.
- They have more than 6 years of rendered service in the National Guard or Reserves.
- They are a spouse of a military personnel who has died over war or has died as an outcome of a service-caused disability.
A qualified borrower’s next agenda should be to secure a Certificate of Employment, more commonly referred to as a COE. The determining qualifier above will dictate what one needs to present as paperwork. A borrower will also be obliged to fill out a VA form 26-1880. PDF copies are available online and can be easily searched for and downloaded.
If you do not make the cut, you may still file for a regular FHA loan which also has its own politics and standards.
According to FHA.com, the following are the requirements:
- Social Security numbers
- Names and location of your employers (past two years)
- Gross monthly salary at your current job(s)
- Pertinent information for all checking and savings accounts
- Pertinent information for all open loans
- Complete information for other real estate you own
- Approximate value of all personal property
- Certificate of Eligibility and DD-214 (for veterans only)
- Current check stubs and your W-2 forms (past two years)
- Personal tax returns (past two years), current income statement and business balance sheet for self-employed individuals