Veterans Administration Mortgages
First of all, if you are either active duty, or a veteran, Thank You for your service. We in this country, are able to do what we do because of what you do, and have done, for us.
There are many opportunities for military service people to finance a home using the VA loan program. In this article we'll get into what you need to know about this great program.
First, one of the benefits that a VA loan can offer is the ability to purchase a home with 0% down. This is a huge benefit, but at the same time keep in mind that there are other costs that you may be paying for out of pocket. These other costs include closing costs and tax escrows, some of which may be negotiated with your seller.
VA mortgages may be use for the purchase of a home that you intend to live in, as opposed to a property that you intend to purchase for investment purposes. They work similarly to other types of mortgages from many perspectives, including underwriting.
One particular benefit to getting a VA loan is that while you have a funding fee, which you can finance, these loans have no mortgage insurance. A low or no down payment without mortgage insurance is unheard of in the mortgage industry.
Income and Credit
While down payment terms are favorable when using a VA loan, you will still need to qualify from both credit and income perspective. Lender underwriting is similar to other types of mortgages, meaning that you will need to have, via your credit report, responsible credit practices.
With regard to income, you will of course need to have proof of employment. One other point worth mentioning here, and this gets asked a lot, is if GI Bill income is able to be used as income while you go to college. While this is a great question, the answer is that it is unable to be used as income by virtue of the fact that it will eventually end. To qualify for any mortgage, VA or otherwise, you need to provide proof that income will likely to continue over time.
Income ratios work a little differently than they do in other types of mortgages in that elsewhere only your before-tax, or gross income is used, regardless of other expenses. With a VA loan, what is called your residual income is used, and this involves taking your gross income then subtracting expenses such as food, utilities, etc. There are forms that address this, and it is a straightforward process that we at Poli can help you with.
If you are married you may put your spouse on the mortgage with you and use their income and credit. But, if you are single and want to use the income and assets of your significant other, you would be unable to.
How do I start the process?
The first thing that you will need to do is to verify your eligibility to get a VA loan. This is typically done with the use of Certificate of Eligibility, or COE as it is sometimes called. We here at Polito can request this for you.
Once you eligibility is determined, the mortgage process works similarly to other mortgage programs, where you supply your documentation for submission to underwriting so your loan can be approved.
VA loans offer great home financing options for those that serve and have served our country. With low and no down payment options, this is a great program to look into.
Please give us a call here at Poli Mortgage Group to learn more.