Is applying for VA loans difficult?

Is applying for VA loans difficult?

Since its inception, more than 20 million people have used the VA Guaranteed Home Loan Program to help them afford a home loan at affordable interest rates. If you’re wondering how to get a VA loan and whether these loans are difficult to get, read more about this helpful program for veterans:

The VA does not make home loans

The Veterans Administration does not provide funds for home loans. Rather, the loan money is provided by many types of lenders who participate in the program and know its requirements. If you’re looking for a mortgage for a new home, always ask the lender if it participates in the VA Home Loan Guaranteed Program. Many institutions have special departments or specially trained staff to assist in applying for these loans. They can make sure you understand the steps involved in getting the loan.

A certificate of eligibility is required

VA loans require a certificate of eligibility that documents your past or current military service. Lenders with trained staff who work with the VA home loan program can easily obtain this document. However, in some cases, the applicant must complete a DD Form 26-1880 or another form online or by mail to receive the document.

You must have a reasonably good credit record

Lenders generally require applicants for the VA Guaranteed Home Loan Program to have a credit score of 620 or higher. This requirement is to ensure that you are able to repay the loan and have a record of repaying your debts.

Certain income requirements apply

You will need to provide documentation of your income to assure the lender that you can repay the loan. This information can be in the form of W-2s from your place of employment, two years of past income tax forms if you are self-employed, and receipts from your military pension or other sources of income.

You will pay a one-time financing fee

A one-time financing fee is required to help pay for the VA home loan program. Currently, the financing fee is 2.15 percent if you have a zero down payment. That fee drops to 1.25 percent if you put a 10 percent down payment on the home. These fees may vary depending on the type of military service and how often you use your right to benefit.

An advance payment is not always required

Your military service allows you certain rights to the loan amount. This means that the government will guarantee the repayment of the loan calculated using your basic entitlement amount, which is currently set at $36,000. However, bonuses may also apply that may allow you to get a home loan of up to $417,000 or more, depending on the area. In general, you can get a loan without a down payment up to this amount.

The home should be appraised

An appraiser must physically visit the property and determine its market value based on the structure itself as well as other homes in the area. The VA provides a list of minimum property requirements that must be included in the appraisal report. These requirements include adequate living quarters; whether it is residential and not commercial; electrical and water systems in good working order and other details. If the property does not appraise for the value of the sale price, the buyer may have to renegotiate the sale.

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