29 Apr 4 Necessary Checks For VA Loan Approval
VA loan approval process is extremely streamlined and straightforward. Let’s discuss VA requirements in detail so that you are prepared for the VA home loan process.
The VA issues a lender’s handbook as a guideline for firms that originate and fund VA loans. As per the manual, there are four essential loan approval elements that VA-approved lenders consider while reviewing loan applications. As a borrower, the more you are familiar with these basic approval guidelines, the better prepared you will be while applying for a VA mortgage. Let’s begin.
Only qualifying veterans are eligible for VA home loans. The first check is your eligibility. You should have satisfied the service requirements and have enough “entitlement” available to be analyzed for a VA loan. Entitlement is a term used to indicate the amount the VA will assure for a particular veteran borrower. “Full” entitlement is usually enough for a VA home loan of $424,100 (or even more in high-cost counties).
The lender’s handbook asserts that VA home loan privileges are to be utilized mainly for owner-occupied properties. Single-family homes, VA-approved condos, townhouses, and multi-family homes (up to four units per borrower) as properties are generally eligible for VA financing. The VA also guarantees the financing of constructed homes if they are connected to a permanent foundation. However, not every lender offers VA loans for modular homes.
As per law, VA borrowers must keep the homes they finance. Verification is done to ensure that borrowers occupy their homes within a reasonable time. Mostly the allotted period is 60 days after closing. Borrowers who are stationed away from home may get an extension of up to 12 months. A spouse is the only relative that can meet the occupancy requirement in a VA-eligible borrower’s stead. VA Streamline refinance loans require only that the borrower occupied the home in the past.
Income & Credit
VA-eligible borrowers need to meet the qualifications for the loans they obtain. Veterans (and co-borrowers, if joint) must have a decent income and satisfactory credit. Lenders are allowed flexibility to determine whether a borrower is a safe credit risk within VA guidelines. VA-approved lenders can set their own credit score minimums. The VA counsels that borrowers have no more than 41% debt-to-income ratio and at least enough residual income to satisfy typical living expenses. Loan amounts can vary based on each VA-eligible borrower’s entitlement and ability to pay.