Showing posts with label Kentucky VA loans Guidelines on Credit. Show all posts
Showing posts with label Kentucky VA loans Guidelines on Credit. Show all posts

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: KENTUCKY VA MORTGAGE LOAN INFORMATION

Louisville Kentucky Mortgage Lender for FHA, VA, KHC, USDA and Rural Housing Kentucky Mortgages: KENTUCKY VA MORTGAGE LOAN INFORMATION:   COMMON KENTUCKY VA LOAN MYTHS FOR KENTUCKY VETERANS VA loans are difficult to qualify for. All VA loans require a down payment. VA loans r...

 COMMON KENTUCKY VA LOAN MYTHS FOR KENTUCKY VETERANS

  1. VA loans are difficult to qualify for.
  2. All VA loans require a down payment.
  3. VA loans require private mortgage insurance (PMI).
  4. You can't refinance a VA loan.
  5. You can only have one VA loan.
  6. You can use a VA loan once.
  7. VA loans are not assumable.
  8. You can't buy land with a VA loan.
  9. You can't build a house with a VA loan.
  10. VA loans only apply to the home purchase itself.

Is it hard to qualify for a VA loan?

Myth #1: Kentucky VA loans are difficult to qualify for.

Fact: VA loans have fewer credit restrictions compared to conventional loans. These reduced restrictions, like a higher debt-to-income (DTI) ratio and more leniency regarding credit scores, mean it can be easier to qualify. VA has no minimum credit score but lenders will have overlays with most being 620 and some going down to 580, with a few going all the way down to 500 but it is very difficult to get approved at this level --- though each individual case and lender will vary.

Do VA loans require a down payment?

Myth #2: All Kentucky VA loans require a down payment.

Fact: While conventional loans generally require down payment options that can reach up to 20%, no such thing is required with a VA home loan at or under the local conforming limit. Down payments are still an option, of course, but they are not a requirement.

The VA allows you to purchase jumbo loans, but the down payment depends on your entitlement:

  • Full entitlement - 100% LTV (loan-to-value) maximum
  • Partial entitlement - Maximum loan must be calculated using 25% guarantee of 1 unit county loan limit. Max LTV is lesser of max allowed or LTV required to meet 25% guaranty

Do VA loans have PMI?

Myth #3: VA loans require private mortgage insurance (PMI).

Fact: Private mortgage insurance is not required for VA loans. PMI typically adds 0.2%-0.9% of expenses to your monthly mortgage payments when you put less than 20% down. That’s a big additional expense you don’t have to worry about when you get a VA loan. Remember, VA loans do come with a funding fee.

Can you refinance a VA loan?

Myth #4: You can’t refinance a Kentucky VA loan.

Fact: Thanks to VA streamline and cash-out loan programs, VA loans are actually easier to refinance than conventional mortgages. The streamline version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.

How many VA loans can you have?

Myth #5: You can only have one Kentucky VA loan.

Fact: There is no limit to the number of VA loans you can have. While it is possible to have multiple VA loans at once, this depends on VA loan entitlement. VA loan entitlement refers to the amount that the VA will pay your lender if you default on your loan. There is a limit on your VA entitlement. It can be split across multiple loans but the limit remains the same. For full entitlement, the VA covers:

  • Up to $36,000 for loans < $144,000
  • Up to 25% for loans > $144,000

If, however, you’ve used a portion of your entitlement in one loan that you’re still actively paying off (or defaulted on), the amount of entitlement you have on any new loan is reduced. This means that you may need to put money down yourself instead of having the usual benefit of a zero down payment for VA loans. To learn about VA loan limits and entitlement, visit us here.

How many times can you use a VA loan?

Myth #6: You can only use a Kentucky VA loan once.

Fact: There is no limit on the number of times you can use the VA loan benefit. You can use the benefit an unlimited number of times throughout your life, as long as you still qualify. To qualify, you need to meet certain requirements, which you’ll already be aware of if you’ve taken out a VA loan in the past. For those who haven’t taken out a VA loan prior, you can learn how to qualify here.

Are VA loans assumable?

Myth #7: Kentucky VA loans are not assumable.

Fact: Federally insured and guaranteed loans are usually assumable. This includes VA loans. What does it mean if a loan is assumable? An assumable mortgage is when the lender allows you, the buyer, to take over the current mortgage that the seller has. This can save a lot of money if the interest rates are lower on the existing mortgage than they would be to take out a new mortgage. Assumable mortgages allow buyers, who otherwise wouldn’t qualify for a VA loan, to take over a VA mortgage. This means that you would get most, if not all, of the benefits that come with VA loan eligibility. In order to assume a VA mortgage, you will need to meet certain requirements, such as:

  • acceptable credit history and  credit score
  • debt-to-income ratio to meet guidelines 
  • No Bankruptcies or foreclosures in last 2 years ( Chapter 7) --Chapter 13 is possible within one year in the plan.
  • acceptable work history for last two years
  • residual income requirements
  • property passing VA standards

You will also be required to pay the VA funding fee that comes with VA loans. This equates to 0.5% of the total loan amount. This may be waived if you’re an eligible military borrower who qualifies for an exemption. Other fees may be required as well.

For sellers, if a non-military borrower assumes your mortgage, your VA entitlement won’t be restored until the loan is paid in full. You will want to request that the lender releases you from liability on the loan to avoid dips in your credit reports if the buyer defaults or makes a late payment.

Can you buy land with a VA loan?

Myth #8: You can’t buy land with a Kentucky VA loan.

Fact: The VA doesn’t authorize buyers to singularly purchase land with a VA loan. However, you can purchase land and build a home on it. This is partially because VA loans are granted with a required occupancy period — you must use the property as your primary residence for at least one year. If there is already a home on the land, this is acceptable. Another acceptable scenario is if you plan to immediately build a home on the land after purchase. This may require a purchase/construction loan.

You can also purchase land with a conventional loan or certain other types of loans. Then you can build a home on the land using a VA construction loan. Upon completion, military borrowers can refinance VA construction loans into permanent VA loans. Builders must be VA-approved.

Finally, you can purchase land and build a property using a non-VA purchase/construction loan. Then you can refinance the loan upon completion of the build into a permanent VA loan (as long as the property meets the VA’s requirements).

Can you use a VA loan to build a house?

Myth #9: You can’t build a house with a Kentucky VA loan.

Fact: VA construction loans do exist, as mentioned above, and under the right circumstances, they can be refinanced into permanent VA loans. Ask your lender about VA purchase/construction loan options.

Can you use a VA loan for home improvement?

Myth #10: Kentucky VA loans only apply to the home purchase itself.

Fact: The VA allows for increases to purchase loans for the purpose of making renovations. The VA’s Energy Efficiency Mortgage program, for instance, lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation and storm windows, among other features.

In conclusion


Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. 


--

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916

American Mortgage Solutions, Inc.

Text/call:      502-905-3708
fax:            502-327-9119
email:
          kentuckyloan@gmail.com

How to get a Kentucky VA Home Loan?


Benefits offered through the Kentucky VA loan program include purchase loans to help you buy a home at a favorable interest rate, cash-out refinance loans which allow for cash withdrawals from your home’s equity to pay for other needs, and Interest Rate Reduction Refinance Loans (also called IRRRLs or streamline refinance loans) to help homeowners refinance an existing VA loan to a lower interest rate or more favorable terms. You may not receive cash out proceeds from an IRRRL.
 
Who is eligible for a Kentucky Home VA loan?
 
Veterans aren’t the only ones who can qualify for Kentucky VA loans. You may also be eligible if you are a current or former National Guard or Reserve member, an active duty servicemember or an eligible surviving spouse.
 
The specific benefits available will be determined by the VA based on the amount of time you (or your spouse) served or service commitment, your duty status and your character of service.
 
Check out the VA webpage for specific eligibility requirements.
Kentucky VA loan advantages for you, the buyer
VA borrowers can enjoy valuable advantages, including:
The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location. The loan cannot exceed the limit for government-insured loans in your area. You can find a list of VA loan limits here.
 
There is no monthly Private Mortgage Insurance (“PMI”) premium requirement. You may have to pay a one-time upfront funding fee that is based on the nature of your military service, the loan type, the size of the down payment, and whether you have used the VA loan benefit in the past.
 
VA rules limit the amount you can be charged for closing costs.
Closing costs may be paid by the seller.
The lender can’t charge you a penalty fee if you pay the loan off early.
VA may be able to provide you some assistance if you run into difficulty making payments.
The VA guarantees home loans that help active military members, veterans and surviving spouses. Kentucky VA loans don’t require a down payment or minimum credit score.
 
No matter where you are in life, that is a super line-up of advantages. If you’re eligible for a Kentucky VA loan, it makes sense to explore VA options.



How do I use the VA loan benefit to buy a home in KY?
 
Once you determine that you fit the eligibility requirements, the next step is obtaining a Certificate of Eligibility from the Department of Veterans Affairs. Your lender will need this document to verify you are eligible for VA loan benefits.


VA loan eligibility for Kentucky Mortgage?
 
If you are considering what your VA loan benefits are, the first step is to dig into the program’s eligibility requirements. The home must be for your own personal occupancy. Those eligible for VA home loans can use the loan to:
Buy a home, a condominium unit in a VA approved project
Build a home
Simultaneously purchase and improve a home
Improve a home by installing energy-related features or making energy efficient improvements
Buy a manufactured home and/or lot
To refinance an existing VA-guaranteed or direct loan for the purpose of a lower interest rate
To refinance an existing mortgage loan or other indebtedness secured by a lien of record on a residence owned and occupied by the veteran as a home
Spouses of servicemembers may also apply for VA loan benefits, subject to certain restrictions.
Once you are on track for eligibility, you will be on your way to getting into your new home–a well-deserved path for you and your family.

Kentucky VA Mortgage Guidelines For Approval

Kentucky Mortgage VA Underwriting




Major changes are as follows, but the documents have been revised throughout so it is recommended that everyone review them

Borrowers using rental income from a non-subject property to qualify need to document a minimum 2 year rental history and 3 months reserves PITI for each rental property (excluding property being vacated and turned into a rental). When no mortgage exists on a rental property, 3 months reserves must still be provided that cover taxes, insurance, HOA dues, and any other fees documented for the property. These reserves cannot come from equity, gift funds, or any loan proceeds.
  • Rental income from boarders can now be used as qualifying income provided
    • A 2 year history of tax returns can be provided showing boarder income generated by the property; AND
    • The use of the property for boarder rental cannot impair the residential nature of the property and cannot exceed 25% of the property's total floor area
  • Alimony, child support, and maintenance require at least 3 years continuance to be considered effective income.
  • For payment plans after a judgment, VA will generally require 12 months of timely payments before credit is considered reestablished. A shorter repayment history may be considered if it can be determined that the borrower addressed the judgment responsibly and began a repayment plan immediately after it was filed. If borrower has missed payments within the last 12 months, they will be ineligible for financing even if the debt is paid in full.
  • For voluntary short sales or deeds-in-lieu where the borrower was current on their payments at the time the property was surrendered, no minimum derogatory credit waiting period will be required.
  • VA's list of required Appraisal Report Contents has been updated and now includes specific photographs required on the appraisal (refer to VA Chapter 11: Topic 3: Appraisal Report Contents for full list).
  • VA Chapter 11: Topic 4: Gross Living Area has been added to provide direction in determining the Gross Living Area of the property.
  • Other sections have been updated to include guideline changes from previous VA Circulars.



Kentucky VA Mortgage Refinance

Kentucky VA Mortgage Refinance Guidelines 


Kentucky VA Mortgage Refinance Guidelines

  • At least 6 monthly payments must have been made on the original loan being refinanced; AND
  • The first payment due date of the new loan must be at least 210 days after the first payment due date of the original loan being refinanced
  • A copy of the Note from the previous loan being refinanced must be provided
  • An IRRRL refinancing a Fixed Rate Mortgage into another Fixed Rate Mortgage must result in a rate IRRL is also know as Interest Rate Reduction Loan in VA terms.
  • reduction of at least 0.5%
  • An IRRRL refinancing a Fixed Rate Mortgage into an Adjustable Rate Mortgage must result in a rate 
  • reduction of at least 2.0%
  • IRRRLs in which a Discount is being charged to the borrower will now require an Exterior-Only Appraisal to be ordered
  1. If the Discount being charged is 1% or less, the loan will be limited to 100% LTV based on the value of the Exterior-Only Appraisal
  2. If the Discount being charged is more than 1%, the loan will be limited to 90% LTV based on the value of the Exterior-Only Appraisal
  • Loan must current be guaranteed by VA and must be current
  • Closing costs must be recouped within 36 months
  • Proposed P&I payment must be less than current payment unless:
  1. Veteran refinancing ARM to Fixed
  2. Term of IRRRL is shorter than existing loan as long as payment does not increase over 20%
  3. Energy efficiency improvements are included in the IRRRL


VA Guaranteed by the Veterans Administration for qualified military veterans. No down payment if the property appraises for the sale price or greater. Credit underwriting is flexible. No Minimum credit score for VA loans, but lenders will create overlays to protect their selling ability to VA for delinquent mortgage loans sold to VA. A lot of VA lenders want a 620 credit score, with some going down to 580, and a few will do down below that but very difficult to get approved with a VA lender. No monthly mortgage insurance payments are required, however they're upfront funding fees that range anywhere from 2.1% to 3.3% based on previous use or first time use of VA eligibility to buy a home, or if you are disabled, you may have not to pay this at all.

The VA Certificate of Eligibility will show if you have to pay a funding fee to VA or if you are exempt.



Kentucky VA Home Loan Approval Requirements with Collections on Credit Report


Collection accounts are account for a debt that have been submitted to a collection agency by the creditor generally due to nonpayment. Below are general tips and guidance on what DU will require when collection accounts are reporting on a borrower’s credit report.

Accounts that are reported as past due but not yet turned over to a collection agency must be brought current. These past due accounts are not considered collection accounts.


Kentucky Mortgage Requirements for Collections and VA Home Loan Approval
Any collection account required by DU to be paid must be paid prior to or at closing.
Isolated collection account does not necessarily have to be paid off for the loan approval.
Borrowers with a history of collection accounts should have reestablished satisfactory credit in order to be considered a satisfactory credit risk.
Lenders/underwriters should review the complete credit history and use sound judgment to determine if the collection account poses a credit risk to the borrower’s ability to repay the loan.
If the collection account is listed on the credit report with a minimum payment, then the debt should be recognized at the minimum payment amount

Credit Requirements for a VA Mortgage Loan Approval in Kentuckygot a question, click here to ask us



Joel Lobb (NMLS#57916)

Senior Loan Officer


American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346



Text/call 502-905-3708

kentuckyloan@gmail.com







If you are an individual with disabilities who needs accommodation, or you are having difficulty using our website to apply for a loan, please contact us at 502-905-3708.


Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant

 Equal Opportunity Lender. NMLS#57916http://www.nmlsconsumeraccess.org/





Kentucky VA Home Loans Credit Scores Requirements




  • No down payment required for Kentucky VA Loans
  • There are closing costs on all home purchases and refinances, however, on purchases, VA allows the home seller to give the home buyer up to a 4.0% sellers concession towards the home buyer’s closing costs. If the home buyer is short on closing costs or if the home seller is not willing to give a sellers concession, the Veteran can get a lender’s credit to cover part or all of the closing costs
  • There is no monthly  mortgage insurance premium on Kentucky VA Loans
  • Here are VA Credit Requirements:
    • VA does not have a mandatory minimum credit score requirement
    • VA lets the lender to set the minimum credit score requirement. Most lenders will want a 620 credit score nowadays. 
    • VA does not have a maximum debt to income ratio requirement. If you loan pre-approval shows a refer eligible, the max debt to income ratios are usually limited to 41% for the new house payment and your current bills on the credit report of your gross income. For example, lets say you make $3000 a month, and you have $400 in monthly bills on the credit report. Then your max house payment would be $830.00
    • 2 year waiting period to qualify for a VA mortgage loan after a Chapter 7 Bankruptcy, short sale, and recorded dates of foreclosure and/or deed in lieu of foreclosure
    • If you have deferred student loans that are deferred for at least 12 or more months, it will be exempt from from debt to income ratio calculations

Related Articles Below:


VA Loans in Kentucky

 10 facts about the Kentucky VA Home Loan program


1. No down payment, no mortgage insurance
These are perhaps the biggest advantages to a VA loan. You don’t need a down payment. None whatsoever. Most mortgage programs, such as FHA and conventional loans, require at least 3.5 percent to five percent down.That’s up to $12,500 on a $250,000 home purchase.
With a VA loan, you can buy immediately, rather than years of saving for a down payment. With a VA loan, you also avoid steep mortgage insurance fees. At 5 percent down, private mortgage insurance (PMI) costs $150 per month on a $250,000 home, according to PMI provider MGIC.
With a VA loan, this buyer could afford a home worth $30,000 more with the same monthly payment, simply be eliminating PMI. Using a VA loan saves you money upfront, and tremendously increases your buying power.
2. Use your benefit again and again
Your VA home loan benefit is not one-and-done. You can use it as many times as you want. Here’s how.
Assume you purchased a home with a VA loan. But now, you’ve outgrown the home and need something bigger. When you sell the home and pay off the VA loan completely, you can re-use your benefit to buy another home. Your entitlement is restored in full.
But that’s not the only way to re-use your benefit.
Eligible Veterans and Service persons can receive a one-time restoration when they pay off the VA loan, but keep the home. This scenario comes into play if you purchased the home long ago, and have paid off the loan. It also applies if you have refinanced the VA mortgage with a non-VA loan.
In these cases, you can keep the home, and enjoy the benefits of VA home buying one more time.
3. Your benefit never expires
Once you have earned eligibility for the VA home loan, it never goes away. Those who served 20, 30, even 50 years ago often wonder whether they can still buy a home today if they never used their benefit. If eligibility can be established, the answer is yes.
Eligibility is based on the length of time served, and the period in which you served. For instance, a U.S. Army Veteran with at least 90 days in service during the Vietnam era is likely eligible.
To check eligibility, first obtain your DD Form 214. With that document, a VA-approved lender can request your VA Certificate of Eligibility for you, or you can request it directly from VA’s eBenefits website. You may be eligible to buy a home using a VA home loan, even if you served long ago.
4. Surviving spouses may be eligible
More than 3,000 surviving spouses purchased a home with their fallen partner’s VA benefit in 2015. Un-remarried husbands and wives of Service-persons who were killed in action can buy a home with zero down payment and no mortgage insurance. Plus, the VA funding fee is waived.
There’s no way to repay the spouse of a fallen hero, but this benefit surely helps them move forward after tragedy.
5. VA Loan Rates Are Lower
According to loan software company Ellie Mae, VA loan rates are typically about 0.25% lower than those of conventional loans. The VA backs the mortgages, making them a lower risk for lenders. Those savings are passed on to Veterans.
Additionally, VA loans come with some of the lowest foreclosure rates of any loan type, further reducing risk for lenders. No surprise here, but Veterans and Service persons take home ownership seriously. These factors add up to lower rates and affordable payments for those who choose a VA loan.
6. VA loans are available from local lenders
The VA home loan is unlike most other VA benefits. This benefit is available from private companies, not the government itself. The Department of Veterans Affairs does not take applications, approve the loans, or issue funds. Private banks, credit unions, and mortgage companies do that.
The VA provides insurance to lenders. It’s officially called the VA guaranty. The VA assures the lender that it will be repaid if the Veteran can no longer make payments. In turn, lenders issue loans at superior terms. In short, a VA loan gives you the best of both worlds. You enjoy your benefit, but have the convenience and speed of working with your chosen lender.
7. Buy, refinance or tap into home equity
The VA home loan benefit is not just for buying homes. Sure, it provides unmatched home buying advantages, but you can also use it to refinance your existing mortgage, whether it’s a VA loan or not.
Homeowners with a VA loan can use the Interest Rate Reduction Refinancing Loan, or IRRRL, to easily drop their rate and payment without an appraisal, or even paystubs, W2s or bank statements. The VA streamline refinance, as it is commonly known, gives VA loan holders a faster, cheaper way to access lower refinance rates when rates fall.
Even homeowners without a VA loan can use a VA refinance. The VA cash-out loan is available to eligible Veterans who don’t have a VA loan currently. As its name suggests, a VA cash-out refinance can be used to turn your home’s equity into cash. You simply take out a bigger loan than what you currently owe. The difference is issued to you at closing.
The VA cash-out loan amount can be up to 100 percent of your home’s value in many cases. Use the proceeds for any purpose – home improvements, college tuition, or even a new car.Many homeowners today are dropping their rate and taking cash out simultaneously, accomplishing two goals at once.
But you don’t have to take out cash to use this VA loan option. You can also use it to pay off a non-VA loan. Eligible homeowners who pay mortgage insurance or are dealing with other undesirable loan characteristics should look into refinancing with a VA loan. It can eliminate PMI, get you into a stable fixed-rate loan, pay off a second mortgage, or simply reduce your rate to make homeownership more affordable.
8. Lenient guidelines for lower credit scores, bankruptcy, foreclosure
Unlike many loan programs, a lower credit score, bankruptcy or foreclosure does not disqualify you from a VA home loan.
Shop around at various lenders, because each will have its own stance on past credit issues. However, VA guidelines do not state a minimum credit score to qualify. This gives lenders leniency to approve loans with lower scores. In addition, VA considers your credit re-established when you have established two years of clean credit following a foreclosure or bankruptcy.
Many homeowners across the U.S., military and civilian, experience bankruptcies and foreclosures due to a loss of income, medical emergency or unforeseen event. Fortunately, these financial setbacks don’t permanently bar VA-eligible home buyers from ever owning again.
The exception, though, is a foreclosure involving a VA home loan. In this case, you may need to pay back the amount owed on the foreclosed VA loan to regain eligibility. But for most home buyers with past credit issues, a VA home loan could be their ticket to home ownership.
9. Funding fee waivers
VA typically charges a funding fee to defray the cost of the program and make home buying sustainable for future Veterans. The fee is between 0.50 percent and 3.3 percent of the loan amount, depending on service history and the loan type.
However, not everyone pays the VA funding fee. Disabled Veterans who are receiving compensation for a service-connected disability are exempt. Likewise, Veterans who are eligible for disability compensation, but are receiving retirement or active duty pay instead, are also exempt from the fee.
10. Buy a condo with a VA loan
You can buy many types of properties with a VA loan, including a single-family (free-standing) home, a home of up to four units, and even manufactured homes. But condominiums are commonly overlooked by VA home buyers.
Condominiums are ideal starter homes. Their price point is often lower than that of single-family homes. And, condos are often the only affordable option in many cities.
The VA maintains a list of approved condominium communities. Veterans can search by city, state, or even condominium name on VA’s condo search tool. It’s not a short list. 
As a Veteran or Service-member, consider the array of home types when shopping for a home.




VA Guaranteed Loan What Is a VA Guaranteed Loan?

 VA Guaranteed  Loan What Is  a  VA Guaranteed Loan? 


A VA-guaranteed loan can be  used to: 
•  Buy a home as a  primary residence  (This  can be  either existing  or  new construction.)
 •  Refinance an existing loan Benefits  of  a  VA  Guaranteed Loan
 •  No down payment,  unless: o  It is  required by  the  lender 
•  The purchase price  is  more  than the  reasonable  value  of  the property 
•  No mortgage insurance
 • Reusable
 One-time VA funding  fee  (can be  included in  the loan) o  If you receive  VA  disability compensation,  you are  exempt  from  the  VA funding fee 
•  Minimum property requirements o  Ensure  the property  is safe,  sanitary  and sound 
•  VA staff  assistance if  you become  delinquent  on your loan
 •  Can be  assumed by  qualified persons
 •  Equal opportunity for all  qualified Veterans Who Is Eligible? In  general,  the  following  people  are  eligible:
 •  Veterans who meet service length requirements 
•  Service members on  active  duty  who  have  served a  minimum period 
•  Certain Reservists and National Guard members 
•  Certain surviving  spouses  of  deceased Veterans Apply  at  va.gov to  determine your eligibility  or call 877-827-3702 for more information. Key Underwriting Criteria 
•  There is  no  maximum debt  ratio.  However,  the  lender must  provide compensating factors if  the  total  debt ratio  is more  than 41  percent.
 •  There is  no  maximum loan amount.
   •  VA’s residual  income  guidelines  ensure  Veteran borrowers  can afford the  loan and determine how  much  money a  Veteran must  have  left  over after  all  debts  and living  expenses  are  considered. 
•  There is  no  minimum  credit score  requirement. Instead,  VA requires  a  lender to review the  entire loan profile. 

For more information,  see the complete VA credit guidelines  at www.benefits.va.gov/warms/pam26_7.asp

How Can You Start  the  Process? 

VA provides policy,  guidelines  and oversight  of  the  program.  Lenders  provide  financing for eligible  Veterans.    

The  guaranty  allows Veterans to  obtain a  without  down payments or  mortgage  insurance  premiums.  
 Veterans need to  obtain a  Certificate of  Eligibility  (COE) to  prove  entitlement.  You can obtain the  COE  online  through va.gov.  
 Lenders  also have  the  ability  to  request  the  COE on your  behalf. April 20 20 Updated 2You should  talk  to  several  lenders  to  find  the  one  that  fits  your  needs.  
They  should know the  VA  loan program. 

 They should also  offer  competitive  rates  and terms. Note:  The  VA appraisal  is  not  intended  to  be  an “inspection”  of  the  property. 

Before  committing to  a  purchase  agreement,  you should get  expert  advice. 

 Talk  to  a qualified residential  inspection service.

  You should also  have  radon testing  performed. 

Can VA  Help If  You’re Having Trouble  Making Payments? 

VA  loan technicians  may  be  able  to  help  you  retain your  home  and  avoid foreclosure. Call 877-827-3702 to  speak to  a  VA loan technician. 



Uses for VA Home Loans?

VA Loans are intended to be used for the financing of a primary residences ONLY.
Occupancy by the spouse or dependent child satisfies the occupancy requirement if the
applicant is on active duty and not able to personally occupy the property.

Eligible Loan Purposes

• Purchase an existing or new construction single family detached home
• Purchase an existing or new construction condominium in a VA approved project
• Purchase an existing or new construction multi unit property (up to 4 units) ONLY if the applicant will be
occupying one of the properties
• Refinance an existing VA loan to lower the interest rate
• Refinance an existing mortgage or other debt secured by the property. The applicant must be occupying
the property.
• Cash out refinance to access the equity in a home occupied by the applicant.

In order to verify your credit history, your lender will obtain a credit report containing
information as reported by all 3 of the major credit bureaus: Trans Union, Equifax and
Experian.
Most people will have 3 credit scores but it is possible that you may have only 1 or
two scores if you have limited credit history.
This report will also include information on any public records such as bankruptcies,
judgments and tax liens.

Credit Scores
Credit Report

Though VA does not have a set minimum credit score requirements, lenders will have a minimum credit
score requirement.

General Credit Score Requirements

In addition to the credit scores, your actual credit history is also analyzed.
Collection account may need to be paid off in order to close your loan
It is preferable that the most recent 12 months show satisfactory payments and no other derogatory
information.
Credit History

If you experienced a major derogatory credit event, there will be waiting periods that will have to be
observed before you can be eligible to qualify for a loan.



Bankruptcy
Chapter 7
2 years from
discharge date

5 years from
discharge date

Bankruptcy
Chapter 13
Immediately after
discharge or
After 12 months of
payments***
5 years from
discharge date

Foreclosure*
2 years from
completion date

5 years from
completion date

Short Sale*
2 years from
completion date

5 years from
completion date

* If the foreclosure or short sale was on a VA loan, you may not have full entitlement available for the new loan
*** Must obtain written permission from the bankruptcy court/trustee and provide proof of satisfactory payment history
These

Income and Employment

Minimum History of Employment

A minimum of 2 year history in the same industry/line of work is required in most
instances but it’s not a universal rule.
Recent graduates can satisfy the two year requirement by providing proof of
schooling with a degree for the line of work you are now
employed in.
Active duty members do not need a two year history as
long as the minimum service requirement for eligibility
has been met.

Self employed borrowers must always have a two year history of self
employment and must show a two year history of filed tax returns to meet the
24 month requirement.

Income Calculations
If you are salaried, your base income will be used to qualify you for the loan.
However, if you are an hourly employee with varied hours, more than likely, your income will be averaged
over an extended period such as 18 or 24 months depending on the situation.
Overtime, bonuses, commission and part time employment must have a 24 history in order to be included
in the qualifying income. The income will be averaged out over 24 months. Verification of likelihood to
continue will also be required.
Non taxable income can be grossed up to account for the non-taxable status.


Debt to Income Ratios

A debt to income ratios is the percentage of your total debt obligation, including the new estimated
mortgage payment, all debts shown on your credit report, as well as alimony, child support etc, as
compared to your gross qualifying income.
EXAMPLE

The rule of thumb is that your debt to income ratio should not exceed 50% of the usable, gross monthly
income. However, higher percentages can be approved.
In addition to the debt to income ratio requirements, VA also has residual income requirements. VA residual
income looks at how much income is available after all monthly liabilities, including tax withholdings,
utilities and child care, are accounted for.

Residual Income By Region
For loan amounts of $80,000 and above
Family
Size

Northeast Midwest South West
1 $450 $441 $441 $491
2 $755 $738 $738 $823
3 $909 $889 $889 $990
4 $1025 $1033 $1033 $1117
5 $1062 $1039 $1039 $1158
over 5 Add $80 for each additional member up to a family of

seven
2400/5000= 48%

Deferred student loans
If student loan repayments are scheduled to
begin within 12 months of the date of loan
closing, the anticipated monthly payment will
be included.
If you are able to provide evidence that the
loan(s) will be deferred for a period outside
that time frame, the payment will not be
included.
Qualifying income: $5000
New mortgage payment: $2000
All other obligations: $400

Monthly debt payments
The payments shown on
your credit report will be
used to qualify you. If the
payments are incorrect,
you will be asked to
provide proof of the correct
payment.

Co-signed loans
If you co-signed for someone on a loan and
that loan is showing on your credit report, the
payment will be included in the ratios unless
you are able to provide evidence that the other
person on that loan has been making the
monthly payments from an account that you
are NOT a co-owner on.

Alimony/child support
You will be expected to
truthfully declare that
you pay alimony or child
support. You will be asked
to provide your divorce
decree and/or child support
order to verify the amounts.

Non-purchasing spouse
You should be aware that if you purchasing a home
in a community property state such as California
and are married, your spouse’s credit report will be
required. His/her debts will be included in the ratio
calculations even if he/she is not going to be on the
purchase or loan.


Documentation Checklist
The following is a general list of documentation required for a home loan application.

Not all items will apply to your situation

F DD214 if not active duty or Statement of service if active duty

EMPLOYMENT/INCOME

F Pay stubs (LES) for the most recent 30 days available
F W-2's for the previous two years
F Federal tax returns for the previous two years. All pages and schedules must be included
F If self-employed, provide all pages and schedules of last two years’ business tax returns and
corporate K-1's
F Award letter for Social Security benefits, disability or Pension
F Proof of receipt of child support, alimony or any other non-employment source of income

ASSETS

F Provide ALL pages of most recent 2 months’ statements for all accounts; including all checking, savings,
stocks, IRA, 401k, etc. The statements must show your name, account number and the name of the
banking institution. Any non-payroll deposits will have to be explained and documented.
F If funds to close will come from a gift, complete the gift letter (will be provided to you) and the following:
F From the donor - bank statements showing the funds in the donor's account and a copy of the check
from the donor's account
F From you - a copy of the deposit slip showing the gift check deposited into your account
F If funds to close are from sale of home
F Estimated closing statement showing anticipated proceeds
F Copy of final closing statement and deposit slip showing proceeds deposited into bank account

PROPERTY
F Select your insurance agent and provide agent's name, address, and phone number
F If refinance, or if you will be retaining your current home or own other property
F Current mortgage statement
F Copy of insurance declaration page
F If you’re currently renting, provide your Landlord’s name, phone number and address.
F 12 months canceled rent checks will be necessary