If you're a veteran looking for an affordable home loan, then you should start by considering a veteran home loan (also known as a VA home loan). Unlike the traditional 30-year mortgage, these VA loans do not require mortgage insurance and allow for 100% financing. They also offer the lowest mortgage rates on the market today, which makes them ideal for any first-time homeowner.
But how do you know if you have VA home loan eligibility? What factors go into determining your ability to get a VA home loan?
The United States Department of Veterans Affairs publishes a Lender's Handbook that serves as a guideline for companies that fund VA loans. This handbook outlines four very basic loan approval requirements that help mortgage lenders determine VA home loan eligibility. Understanding these four basic requirements is key to understanding if you qualify for a VA home loan and attractive vet mortgage rates.
These four requirements are:
The lender's handbook states that mainly owner-occupied properties are subject to VA home loan benefits. Specifically, the VA lists single-family homes, VA-approved condos, townhouses, and multi-family homes (up to four units per loan taker) as properties that get VA consideration for financing. There may be additional requirements included on a per-property basis. In some instances, a modular home can be considered, but not all lenders offer this loan option.
Credit History and Income
Borrowers must qualify for the loans they obtain, and though VA loans have softer terms when it comes to credit history, borrowers still must satisfy a credit check and proof of income. Lenders are given the flexibility to decide if a borrower is a safety risk in accordance with VA guidelines. In general, the VA recommends home loan lenders have a 41% debt-to-income ratio, which is just a guideline and can be exceeded in most cases. The VA loan is usually the most flexible loan program when it comes to debt ratios.
Entitlement To The Benefit
One of the key requirements is the satisfaction of the service requirement. Borrowers must be eligible for the loan itself and prove they served in the military to qualify for the Veteran Home Loan program. They must also have enough "entitlement" available, terms which refer to the amount the VA will grant a particular borrower for a loan. Full entitlement is generally enough for a VA home loan of nearly $424,100, according to the handbook. In high cost areas, loan amounts are available over $424,100. The maximum loan amount available is determined by the county the property is in. There are no counties in the state of Texas where loan amounts exceeding $424,100 are allowed.
Owner Occupancy For Financed Homes
VA borrowers must occupy the homes they want to buy. They must verify that they will occupy their home within a reasonable time, and that generally means within 60 days after the closing date. Borrowers deployed away from home may receive an additional 12-month extension; however, spouse is the only relative that may satisfy the occupancy requirement in the borrower's stead.
There are other factors that determine VA home loan eligibility, but these are the four most basic requirements. For more information, review the lender's handbook or talk to a mortgage company near you. And if you have any questions about qualifying for VA home loans in Texas, contact us for more info. We'll always be happy to help.