The VA home loan program offers borrowers interest rates that stack up favorably in comparison to traditional loans. Generally, VA loans come with an interest rate between half a percentage point and a full percentage point lower than conventional loans do. The program also has easier qualifying standards, including no minimum credit scores. No money down and no private mortgage insurance is required with a VA loan. The benefits offered make it easy to understand why 18 million veterans have taken advantage of the loan program over the previous 70 years. Recently, the popularity of the program has expanded. Over the past decade, the number of VA-backed mortgages has increased by six percent. With a million service-members expected to be discharged in the next five years, and awareness of the loan rising among qualified applicants, the number of loan users will presumably spike.
If you are a prospective first-time home buyer and you’re eligible for VA loans, you may wonder how to get a VA loan. The obvious answer is that you must meet the initial criteria as a qualified veteran, active duty military, or surviving spouse. However, there are about a dozen more considerations involved in the process of obtaining your VA loan. VA Home Loan Centers has compiled a list of 13 tips to help get you on your way to becoming a first-time home buyer VA loan.
To get started with your VA Home Loan call 1-888-573-4496.
- Meet one of the four initial eligibility requirements, or possibly a conditional fifth criteria:
- National Guard/Reserve members must have a minimum of six years of service-time prior to applying for a VA loan.
- Regular active duty members may apply after service of 181 days or 90 days for the Gulf War.
- Retired Veterans must have completed 181 days of service or 90 days for the Gulf War, and received an honorable discharge.
- Surviving spouses may be eligible if they remarry on/after age 57, and on/after 12/16/2003.
- Un-remarried spouses may be eligible for the loan if any of the following apply: spouse was a veteran who died while serving or whose death was related to service-inflicted disabilities, or whose spouse is MIA or a POW.
- Consider your credit score. A good credit score is especially important for obtaining a new VA home loan. The minimum recommended credit score for a VA loan is 620.
- Reduce your debt to income ratio to 41 percent. As with your credit scores, having lower debt enhances your eligibility to get a VA loan.
- Determine your ability to afford the monthly VA loan payment. In addition to being able to afford your VA loan payment you must also be able to pay your existing consumer debt payments and afford a minimum standard of living (as determined by the US Department of Veteran Affairs.
- Realize that once you meet the eligibility requirement for a VA loan, you also have an entitlement to a first-time home buyer VA loan. This means the VA guarantees your loan.
- Understand the advantages of VA loans. These include no money down, no private mortgage insurance required, and potential interest rate reductions.
- Determine what you need/want in your first home. Consider size, features, location and other related details. This will help you concentrate your house hunting.
- Determine your VA loan limit. This designation is based on county, city and state in which the property is located in. Knowing this limit will likewise help you focus your house hunting efforts.
- Decide if you prefer and/or can manage a 15-year or a 30-year VA mortgage payment. Your monthly payment can vary by as much as $200 or more, for example, for a $100,000 VA loan. To determine this, use our VA loan calculator located here.
- Realize you may include up to $6,000 for energy efficient improvements in your VA loan, as long as the improvements offer direct benefits and savings to you as a borrower.
- Prepare and organize all needed paperwork for the VA loan application. This will help expedite the process. You will need to cover the following details: all personal contact info and details for the primary borrower, such as social security number; employment information; income details, including a monthly average; gross income before tax deductions; other income; and assets and debts, including monthly debt payments.
- Obtain a VA loan pre-approval. This step verifies all of your financial information and creditworthiness. This also verifies the total amount you can borrow and gives the seller the confidence that you are a serious buyer.
- Apply for a VA loan using the VA home loan application. Use the Long Loan Application, not the short application, and accurately complete all portions. Remember that VA loans require no down payment.