VA Home Loan
A VA home loan is available to eligible members of the United States military who have served on active duty, the National Guard or Reserves.
The Serviceman’s Readjustment Act (GI Bill of Rights) was signed into law on June 22nd, 1944 by President Franklin D. Roosevelt to provide veterans with federally guaranteed home, farm and business loans with no down payment. Since then, the VA loan program has benefited over 18 million veterans and their dependents with home ownership.
National Guard members, Reservists and veterans must meet VA loan eligibility requirements for time in service as established by the Veterans Administration. If you served on active duty for 90 days or more during wartime, 180 days active duty during peacetime or six years in a National Guard or Reserve component, you are eligible for a veteran home loan. See my VA Loan Eligibility page for more information and to view all service requirements.
All veterans must meet the VA’s service requirements to be eligible for a VA home loan.
Credit requirements for a VA loan are more lenient than other loan programs. You must have at least a 620 FICO score with two or more credit bureaus. In the case of bankruptcy, foreclosure or short sale, an eligible veteran must have waited two years.
A veteran home loan can be used for the following transactions:
- Purchase – Finance the purchase of an existing home or new construction home.
- Interest Rate Reduction Refinance Loan – This refinance is more commonly know as the VA IRRRL or VA streamline refinance and is used to improve the terms of your existing veteran home loan. This refinance does not require an appraisal or income documentation. You may roll in all of the VA allowed closing costs into the new loan and you cannot receive more than $500 cash back at closing. Texas residents may not receive any cash back at closing.
- Cash out Refinance – This loan can be used to change your existing financing into a VA loan or utilize the equity in your home to consolidate debt, make home improvements or to receive cash for any need. A cash out refinance is not available for Texas residents.
A VA home loan uses the conforming loan limit set by Fannie Mae and Freddie Mac of $484,350.
For loan amounts in excess of $484,350, a high balance VA home loan is available.
The maximum VA home loan amount as determined by the Federal Housing Finance Agency (FHFA) is $484,350 for most counties in the United States. However, some counties have an adjusted higher loan amount due to increased housing prices. The Veteran’s Administration will still provide the loan guarantee up to 100% financing for these higher loan amounts. To check your county’s VA loan limit, please visit the VA’s Home Loan Limits page.
National Guard members, Reservists and veterans can receive a VA loan for more than the county limit set by FHFA, but a down payment is required. To determine your down payment amount, please contact me to assist with the calculation.
VA Funding Fee
Mortgage insurance is not required on a VA loan, even with 100% financing. However, the VA charges a funding fee that is typically financed in the loan.
The VA funding fee is a percentage of the loan amount and is determined by the type of VA home loan you are receiving, your military service and if you have a down payment. For disabled veterans or surviving spouses; the VA funding fee is waived.
A VA loan may be used for the purchase or refinance of the following property types:
- Single family residence – one unit, attached or detached including town homes
- Planned Unit Developments – PUDs
- Multi-unit – two to four units (owner-occupied only)
- Condominiums – communities must be approved by the Department of Veterans Affairs
A property must be owner occupied for at least twelve months per VA guidelines. Owner occupancy is not required on a VA Interest Rate Reduction Refinance Loan (streamline) when the home was previously used as a primary residence and was converted to an investment property.