The Veterans Administration created this mortgage program in order to assist active duty military, National Guard members, Reserve members and surviving spouses of deceased veterans who died due to service-related injuries/illnesses to be able to purchase a home with no money down.
An individual must have served sufficient time and either be still active or honorably discharged in order to be able to obtain a Certificate of Eligibility for a VA mortgage.
VA charges a Funding Fee upfront that can be financed into the loan and the amount of the fee varies based upon percentage down and whether this is the Borrower’s first time using the program or is a subsequent use of it. If a Borrower receives Service-related Disability Income from VA, then the Borrower is exempt from paying the VA Funding Fee.
VA loan have no monthly mortgage insurance component.
VA not only has debt ratio guidelines, but also is the only program that has a minimum residual income requirement. VA sets the minimum amount based upon region of the country, loan size and household size. The Borrower must meet both debt ratio and residual income guidelines in order to qualify. VA counts childcare expenses as a debt in both calculations which is also unique to this mortgage program.
VA does have minimum property guidelines for safety and condition, but they do vary slightly from those of the FHA program. For example, VA has no minimum distance requirement for well and septic systems.
Another unique feature is that VA will only grant loans to the eligible Veteran, eligible Veteran and his/her spouse or to a surviving spouse of a deceased veteran who died due to service-related injuries/illnesses.
If you would like to learn more or would like to pursue a pre-approval for a VA mortgage, please contact us.