Qualifying veterans, service members have what is called an entitlement, which is essentially a financial guaranty from the Department of Veterans Affairs on a mortgage issued by one of its approved lenders. The VA itself does not actually these  issue home loans but it does guaranty a portion of each. That guaranty helps borrowers who might otherwise struggle to secure financing because it is a financial promise directly from the Department of Veterans Affairs. This is important for lenders.

VA loans are available to some non-military personnel. This includes both unmarried and remarried spouses. For example, an unmarried spouse whose veteran died on active duty or because of a disability connected to his or her service is eligible for VA home loan benefits.

Surviving spouses who obtained a VA loan with the veteran before his or her death can also obtain a VA Interest Rate Reduction Refinance Loan, better known as a VA Streamline refinance. Surviving spouses who remarried upon or after turning age 57 and on or after December 16, 2003, may be eligible for a VA home loan. Surviving spouses who remarried before that date are no longer eligible to participate.

The spouse of an active duty member who is listed as missing in action (MIA) or a prisoner of war (POW) for at least 90 days is eligible for one-time use of the VA home loan benefit.

Yes, within the VA home loan programs there is a Cash-Out Refinance. This option helps homeowners extract cash from their home’s equity while still obtaining a lower interest rate.

Not all homebuyers eligible for a VA loan will secure one. The prospective borrowers must still meet credit and underwriting guidelines of the lender and the VA. Getting prequalified for a loan is an initial step for borrowers and can be completed online or over the phone. This basic step gives veterans an idea of purchasing power and also lays the foundation for the next steps: credit and underwriting process. After this step, veterans with sufficient credit scores will move toward loan preapproval, which is a more formal stage desired by home sellers and real estate agents.

Basic Allowance for Housing, formerly known as Basic Allowance for Quarters, is a key asset that can help service members qualify for and afford a VA mortgage. This monthly housing allowance can be counted as income provided it’s stable and likely to continue. The same is true for other military allowances and forms of bonus pay. Lenders have to make sure the payments are reliable and consistent. Qualified borrowers can use BAH to cover some or all of their monthly mortgage payment.

There are two layers of entitlement for qualified borrowers. The first tier and the second tier combine together to create the VA guaranty. A second, additional layer of entitlement can help borrowers who have experienced foreclosures or other major problems with VA loans. With second-tier entitlement, even veterans who have previously defaulted on a VA loan can still purchase. With a second-tier entitlement purchase, there is $144,000  minimum loan.

The VA Loan is designed only for primary residences that are occupied by the owners of the properties. It may not be used for second homes or rental properties.

Veterans and service members can have someone sign on the loan with them. However, there are some restrictions. For a VA loan the co-borrower must be either another veteran or a spouse. That means parents, friends and significant others who don’t fall under one of those two headings cannot be a co-borrower on a VA loan. Married veterans may obtain a VA loan on their own.  But if they live in a community property state, they should know their spouse’s income and active debt will be factors  for the loan application.

Prospective borrowers must prove to VA approved lenders that hey have enough consistent income to meet monthly expenses, including a new mortgage payment. Lenders prefer a minimum of two years worth of stable employment, plus income from the same employer and job type. Reliable, documented income can be included from a host of sources, including:
• Base pay & allowances
• Non-military employment
• Retirement income
• Self-Employment
• Commissions
• Rental income
• A spouse’s income
• Alimony/child care

Income from overtime work, part-time jobs, second jobs and bonuses can be used if veterans show that same two-year period of stability. Self-employed  veterans or active duty members who make a living with building trades, doing seasonal work or working mostly on commission have a few extra paperwork hurdles. In these cases, tax returns for the previous two years will be essential in verifying income.

A bankruptcy or foreclosure doesn’t automatically disqualify you from getting a VA loan. Much more depends on when the event occurred. Generally,  veterans won’t secure VA financing for two years after a bankruptcy or foreclosure. The VA has some exceptions that allow military members to participate in the program before that two-year mark. However, it is the VA-approved lenders, and not the VA, who issue the loan. The lenders have more stringent standards that rise above the VA’s guidelines. And that means there’s almost no way for a borrower to secure financing for at least two years after bankruptcy or foreclosure.

The VA Funding Fee is a mandatory fee applied to both purchase and refinance loans. The fee helps the home loan program continue running. It’s a percentage of the loan amount, and it changes depending on several factors. These factors include whether the loan is a purchase or a refinance, how many VA loans you’ve had in the past and the type of military service.

You can see the full breakdown and even calculate your exact fee by visiting VAFundingFee.com.

Several different economic factors shape mortgage rates. Typically, lenders set rates based on the bond market as well as the greater financial landscape. Interest rates fluctuate constantly, maybe even multiple times per day.  This makes it imperative to work with a specialist about locking in your rate. As with other lending products, military members with excellent credit can secure lower interest rates and better loan terms than those with less sterling credit. In general though, VA loans have consistently better rates than other conventional loans.

Naturally, your credit score still plays an important role in establishing a mortgage rate. Solid credit means lower rates and better terms. All the the VA requires is for borrowers to be a satisfactory credit risk.  But VA lenders have their own additional requirements and will scrutinize an applicant’s credit score. We encourage potential borrowers to get a handle on credit profiles early,  and to get caught up on any outstanding debts. Putting yourself in the best position possible when it comes time to start the home-buying process will help tremendously.

The VA entitlement isn’t a one-time benefit. You can qualify and use the VA home loan benefits over and over again. Most veterans will only ever have one VA-backed mortgage at a time. Still, there may be unique situations where veterans have more than one VA loan at a given time. Generally, these circumstances are related to relocation needs, such as deployments or jobs. Also keep in mind, VA loans are for primary residences only. The Va home loan program can not be used to purchase investment properties or businesses.

With our experience in the VA Loan industry, we’ve worked hard to make the process as simple and streamlined as possible. VA loans offer less stringent requirements than other lending programs, which is a huge benefits for veterans and active duty personnel. Prospective borrowers still need to meet basic financial and credit-related benchmarks set by the VA and the lender. Once met, veterans receive a financial guaranty from the VA, and that guaranty gives lenders the confidence to issue no-down payment loans with both low rates and great terms.

The Cash-Out Refinance, one option with a VA home loan,  helps homeowners extract cash from their home’s equity while obtaining a lower interest rate. At 1st united home Loans, we help veterans refinance up to 100% of the appraised home value while other lenders cap at 90%. The process for a Cash-Out Refinance is similar to the process for a VA purchase loan. Veterans with a conventional or FHA mortgage can refinance into a VA loan using the Cash-Out program.

Contrary to what you might have read or heard, there isn’t a maximum loan amount on a VA loan. There is, however, a maximum amount the VA will guaranty without the borrower making a down payment. That’s what industry people are referring to when they reference VA loan limits. In today’s market, qualified borrowers can purchase a home worth up to $417,000 with no money down across most of the country and in Virginia. In other high-cost areas, the maximium can rise to over $725,000.

Yes, VA borrowers may include up to $6,000 on a loan for energy efficiency improvements. This is known as an energy efficiency mortgage, or EEM. These these unique loan products allow homeowners to make select upgrades and repairs to the house to maximize energy efficiencies. Though money is spent at the outset, energy improvements can ultimately lower heating, cooling and other related energy costs in the long run. Any monthly savings can then be funneled into additional payments to the mortgage principal or any other household necessities that are needed. Veterans and military families who are interested in an EEM should consult with their lender to arrange for a home energy audit from a professional firm.

There is a lot of official paperwork VA approved lenders need in order to process a loan. That documentation includes the borrower’s Certificate of Eligibility, tax returns and other critical paperwork. Inevitably, paperwork can get lost, so don’t worry you can’t find your discharge documents or other important pieces of paper right now. We will help you obtain fresh copies of these important documents with no hassle. Borrowers can also contact the VA and other entities to secure the paperwork themselves.  It’s best to work with the lender as quickly as possible to take care of document needs to keep the process running smoothly.

VA loans do not have any kind of prepayment penalties. So, borrowers can pay off their loans early without worry. That’s a relief for homeowners who their interest costs cut down over time. By paying an additional $50 or $100 a month toward the premium,  tens of thousands of dollars and years can be shaved from a 30-year fixed-rate mortgage.

For the vast majority of veterans, active duty service members and military families, the VA loan is the best options. The VA loan represents the most flexible and powerful loan program on the market. Qualified borrowers are able to buy a home worth up to $417,000 without down payments or out-of-pocket costs.

However, there are some cases when a VA loan may not be right.  For veterans with significant cash reserves – those who can cover a 20-percent down payment- they may want to consider conventional financing. But that just isn’t the typical financial situation for many of our military borrowers. For most of our clients,  the VA loan makes the most financial sense and allows them to get the biggest bang for their buck.

Veterans and active duty homeowners who qualify can refinance into a VA loan. They can do this using the program’s cash-out refinance program. The Cash-Out Refinance  process is similar to the one borrowers go through for a VA purchase loan, from the income verification and debt-to-income ratio to a home appraisal. Qualified homeowners with conventional or FHA mortgages do not have to take out cash when they refinance into a VA loan, but they are ineligible for the simpler VA Streamline program.

The vast majority of military buyers use their VA loan to purchase or refinance an existing single-family home. But veterans interested in purchasing a condo or building a home from the ground up can also utilize a VA loan. You can use a VA loan:

• To purchase a residence that’s owned and occupied by the veteran.
• To refinance an existing VA-guaranteed or direct loan in order to lower the current interest rate.
• To refinance in order to take out cash.
• To repair, alter or improve a residence owned by a veteran.
• To simultaneously purchase and improve a home
• To make energy-efficiency improvements in conjunction with a VA purchase or refinance loan.
• To purchase up to four one-family residential units in a condo development approved by the VA. One of those four units must be used as the borrower’s primary residence.
• To purchase a farm residence to be owned and occupied by the veteran. The property cannot be a working farm or an income-producing property.