VA Home Loans
If you have served in the military, we at Skyridge Lending, LLC, thank you for your service. We truly understand VA Home Loans. With several of our staff having served in the military, we know firsthand the challenges and unique situations that can arise when applying for a mortgage. We appreciate your service and always go the extra mile to help in any way we can to get you the best deal as efficiently as possible. We have no overlays. We just follow VA guidelines. If VA will allow it, Skyridge Lending LLC will do it. For more information on overlays click here.
The VA loan was designed to offer long-term financing to eligible American veterans or their surviving spouses. Back in the 1940s, the U.S. Department of Veteran Affairs created a military mortgage loan program – the VA home loan – to help service members purchase homes once they returned from duty. The VA home loan was guaranteed by the federal government and lent out through approved mortgage lenders. Today, VA home loans are both for those actively serving and for veterans. They offer a number of benefits, including no down payment, no monthly mortgage insurance costs, and the ability to refinance up to 100% of your primary home’s value.
VA Loan Center
The VA option allows loan sizes at 100%. For closings after January 1st, 2020 VA will no longer have a maximum loan size for those that have full entitlement.
VA allows credit scores down to 580 at 100% financing/no money down and down to 500 with 10% down payment, depending on what is on the credit. VA will also typically allow a no score if there is no credit reporting to the credit report. These are manually underwritten and coded as a 620. Alternative credit is used in these cases to establish credit history. Alternative credit can be rent, utilities, cell phone, insurance, or almost anything that has an established monthly payment that can be verified by a third party and is paid as agreed for the past 12 months. Alternative credit is a good option for First Time Homebuyers to use for qualifying as well. VA does allow for First Time Homebuyers loans as well. At Founders Mortgage we are able to do the manual underwriting for no scores or for those loans that don’t get an automated approval but still meet the VA guidelines. At Skyridge Lending, we understand that active duty military service can contribute to credit issues with random late payments reporting and collection data from a move for something that got missed. VA and Skyridge Lending are very flexible in these situations as long as they can be explained and make sense. Call us today to go over any specific situations.
VA is usually very flexible with debt to income ratios as they understand there are situations where military required moves will have higher debt to income ratios. They are also flexible with allowing previous properties to be rented out in cases where they aren’t sold and will count a portion of the rent income against the payment, again helping you qualify for your next home. There are many cases where the debt to income ratio on paper is actually much higher than it is in reality. At Skyridge Lending, we will help you determine what makes sense for your situation from a qualification standpoint.
A really nice feature of a VA loan is that there is no monthly mortgage insurance. Many other loan options have monthly mortgage insurance. Click here for more information on mortgage insurance. VA does charge a funding fee or up-front mortgage insurance premium. They use these funds to help offset any losses from mortgage loan defaults. For first time users the funding fee is 2.30%. For subsequent users it is 3.60% unless the veteran is disabled. When disabled there is no fee. Disabled veterans may also qualify to have the property taxes waived depending on the county and percentage of disability. When utilizing the 100% financing option that VA has we do recommend that you plan on being in the house for at least the next three to five years because it will normally take time to build up the equity in the property.
VA does allow for a Veteran to have more than one VA loan at a time in some situations by using bonus entitlement. We have a formula we use to determine this amount and in many situations can approve you for another VA loan. Please contact us for more information about how this works. (Qualifications)
You may be eligible for a VA loan if you meet one or more of the following conditions:
You have served 90 consecutive days of active service during wartime
You have served 181 days of active service during peacetime
You have more than 6 years of service in the National Guard or Reserves
You are the spouse of a service member who has died in the line of duty or has a service-related disability
To qualify for the VA loan we will need a copy of your Certificate of Eligibility. You can order this yourself or we can order this for you with a copy of your DD214 or NGB22. You can always order this yourself by calling the Department of Veteran Affairs at 877-827-3702 or visiting their COE site at https://www.benefits.va.gov/homeloans/purchaseco_certificate.asp. There have been several times over the years that we have been involved in helping veterans obtain their COE when they were told wrongly by another party or the VA system that they didn’t qualify. Sometimes entitlement has to be restored if you previously owned a home with a VA loan. We have several contacts with the VA offices that are very helpful in getting these situations worked out. If you’ve had any problems with obtaining your COE or been told that you don’t qualify and you believe you do then please let us know and we will be glad to help in any way we can.
There are several things we suggest you look over before applying for a VA home loan through Skyridge Lending, LLC. Reviewing your budget, credit report, and employment history before you apply can make a big difference in the VA eligibility process.
Budget Those applying for a VA home loan should pay special attention to personal budgets. It is essentially up to you to determine if you are ready and able to allocate monthly payments towards your future home. Lenders don’t have access to budgetary obligations outside of your credit report. We consider items listed in your report merely for qualification purposes and aren’t able to collectively determine if you are able to afford your future home loan payments. Some things to look for when budgeting include:
Income – subtract the income taxes from your salary to produce the “take-home” pay per month
Bills – Add up any monthly bills such as phone, cable, utilities, and credit cards. Don’t forget to consider any irregular bills like licensing and insurance.
Other Expenses – Look at how much you average spending on food, gas, and activities throughout the month. These costs can consistently take up a large chunk of your budget.
Savings – An important aspect new homeowners overlook is the need to set money aside each month for future home improvements, maintenance, and emergency repairs. Things happen, and it’s too easy for homeowners to neglect the upkeep of a home, eventually deteriorating the value of their investment.
In many cases, you can purchase a home for a similar payment or less than what rent would cost in your area. But keep in mind, that is offset by the added cost of maintaining your property. If you are ready for the financial responsibility of owning a home, the next step for us at Skyridge Lending, LLC, is to observe if you have payment shock. Payment shock is basically what happens when a homeowner’s monthly housing payment increases. Studying your payment shock will help us better ensure you are prepared to make housing a bigger part of your budget.
Credit Report There are three major credit bureaus that can provide you with accurate and free credit reports: Equifax, TransUnion, and Experian. You can get a free copy of these once a year from AnnualCreditReport.com. Click here to learn more about maximizing your credit history. (Link this to the part on credit) Once you receive your credit report, some things to look for are derogatory credit items, errors, revolving debt, and your credit scores. Derogatory credit items are negative items that represent risk to lenders. They are indications of delinquency or late payments. Sometimes those items are incorrectly recorded. Make sure to double-check for errors within the report. An error can occur if you accidentally applied for credit under different names, entered inaccurate address information on an application, or messed up your Social Security number. These items can usually be fixed and removed to improve your credit score. In some cases, these errors simply require an explanation. We can customize a plan for your situation so that you can successfully get a mortgage loan. Most things can be taken care of quickly, while some can take longer to line out. Contact us to create a detailed plan today! Your credit score is very important when applying for a VA home loan as it can affect your interest rate and payment. A credit score is basically the numerical representation of your credit history and creditworthiness. Credit scores are used to determine two things when it comes to VA loans:
What your interest rate is going to be on your new loan
Your eligibility for the new VA home loan, meaning your approval or denial, and at what loan size or purchase price amount
The minimum credit score requirement can vary with other lenders’ overlays. At Skyridge Lending, LLC, we match VA guidelines, which currently allow for scores down to 500 case by case, and as low as 560 for 100% financing purchase and 580 for 100% financing as a cashout refinance. (Refinances(this can be where the VA refi tab takes them as well)) We also do the VA Refinance loans. VA has two options for these. If you are already on a VA loan and want to reduce your loan then a great option is the VA IRRRL or Interest Rate Reduction Refinance Loan. This option typically doesn’t require an appraisal and has very low closing costs. This streamline option doesn’t verify income or assets and as long as your mortgage is not over 30 days late for the past year then you qualify, no matter what your credit score may be. VA also allows for full qualifying refinances in order to allow up to 100% cash out giving you access to the full equity value of your home. This usually requires a 580 minimum score to go to 100% or a 500 to go to 90% loan to value.
Employment History Before you apply for a VA home loan, it is important to ensure you or your veteran has met the employment requirements set by the Department of Veteran Affairs. These requirements say a veteran must have at least two years of consistent, full-time employment. Having a job gap does not keep you from receiving a VA loan, but providing an explanation for this gap is crucial. Full-time schooling can count as history as well depending on your line of work and the details so contact Skyridge Lending for more information about this topic.
Purchase Price and Payment Amounts Skyridge Lending, LLC can help you calculate the payment to match your budget and qualifications, helping you determine the purchase price you can offer. The VA does allow the buyer to have the seller pay most of their closing costs. One of our loan officers can work with you to help determine this amount and negotiate this into your offer. The VA home appraisal will need to be paid by you, the buyer up front in most cases. Price varies by location and is set and published by the VA directly. Please contact us today to go over this in more detail.
To Learn More
To learn more about VA home loans and your eligibility, give us a call or an email! We understand that every person’s situation is different, so we are ready to take a close look at your options and help you decide which path is best for you and your family. Be one step closer to home ownership with the VA-guaranteed loan of your dreams with Skyridge Lending, LLC!