VA mortgage- understanding what is best for you
A VA mortgage is one of the best ways to afford a home for many people. While applying for a Certificate of Eligibility is the best way to know that, you can also go through the questions that are given ahead to take a guess regarding your VA loan eligibility.
Is this loan to refinance or buy a home that has a moderate price?
While there may be no limit set on the loan amount by the VA, it does not give out those loans for you to buy mansions. The lenders do have their own limits, and generally, for any loan above $144,000, the maximum amount is around four times that of the guarantee.
Is it mandatory to provide documentation for supporting all forms of income?
While the norms may be relaxed a little for a VA backed loan, you will still need to document all your income with the application. This includes W-2s, tax returns and/or pay stubs, to demonstrate your ability of affording the monthly payments.
Is a VA Home loan only for buying primary residence?
The VA mortgage is there for you to buy your primary home, and not any vacation homes and rental properties. However, you can rent out the rest of the units in your duplex and triplex if you occupy one of the units. It is mandatory for veterans to make the home their primary residence in 60 days. For those service members who are not married and are on active duty, this period is set to 12 months.
Does it allow one to refinance and take out cash in the future?
While the VA makes it possible for you to cash out exactly 100% of the home’s value, lenders set limits on their own which is around 90%. It will be beneficial for you to keep in mind that refinancing from non-VA to VA are also considered as cashing-out, even in scenarios where it is being used for paying off some old mortgages.
Is putting down less than 20%, or refinancing at that percentage of equity possible?
Conventional loans that are greater than 80% of the total value need MI or mortgage insurance, which you have to additionally qualify and pay to get. For VA mortgages, the guarantee amount needs to be paid along with some funding fee, which you can also add on to your loan amount. However, this fee is waived off for disabled veterans.
What are the additional requirements for getting a VA loan?
Unlike conventional lenders, VA mortgage and associated underwriting rules come with more flexibility. For instance, if you file for bankruptcy protection, you have to wait for a minimum of four years to qualify for Fannie Mae or even Freddie Mac loans, while in case of VA financing, you will be eligible again in two years.
Answering these simple questions should help you judge your chances of getting a VA backed loan as you go ahead to apply for a VA mortgage. Good luck in buying your first home!