Benefits of VA Loans

Filed under: Market Comentary

VA loanVA guaranteed home loans benefit Veterans because they do not need to make a down payment and there is no upper limit or required cap on the income of the borrower. Without a down payment as security against foreclosure, lenders receive what is known as a “certificate of guaranty” from VA, which means that as gratitude for honorable military service, the government is vouching for the Veteran’s “trustworthiness” to repay his or her debt.

VA offers a variety of home loan guaranty programs for Active Duty Service members, Veterans, and National Guard and Reserve members. The length of your service commitment and/or duty status may determine your eligibility for specific home loan benefits, and to obtain a VA loan, it is important to note that the law will require the following:

  • The applicant must be an eligible veteran who has available entitlement
  • The loan must be for an eligible purpose
  • The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan
  • The veteran must be a satisfactory credit risk
  • The income of the veteran and spouse, if any, must be shown to be stable and sufficient to meet the mortgage payments, cover the costs of owning a home, take care of other obligations and expenses, and have enough left over for family support

Before you begin the application process, it is an excellent idea to obtain a copy of your credit report. Once you have done this, as an approved VA lender, we can point out any credit problems you might have and provide you with a loan estimate.

The best way to determine how much “borrowing power” you have is to get pre-qualified for a loan. You will first need to supply us with what your income and assets are, and, based on that information, you will find out if you qualify for a given loan. And, once you pre-qualify, you will have a strong idea of how much income you will need to qualify. You will also know what price range you can look at for the home you want to buy.

In addition, because the loan amount may not exceed VA’s estimate of the value of the property, in order to finalize the loan, you must request an appraisal by the Veterans Administration. Just remember that VA guarantees the loan and not the condition of the property.

With that said, there are a few tips to consider:

1. Don’t pick a home in poor condition. While the VA appraisal estimates the  value of the property, it is not an inspection and does not guarantee that the home is free of defects.

2. Be cautious with distressed properties. Be aware that buying a distressed property, one in foreclosure or short sale, with VA financing could be extremely challenging.

3. Include a preapproval letter. This will make the seller feel at ease and make the process go more smoothly.

4. Keep your VA offer competitive and realistic. Just as you would with any conventional offer, talk to your lender and use both of your knowledge to make your offer positive for all parties involved.

VA home loans are definitely unique, so if you are thinking about purchasing a home this way, please give us a call and we can go over all of the information you need to qualify for a VA loan.



Franklin Loan Center | NMLS 237653
Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, 4131316
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