From Free Resources for CA Real Estate Agents November 2013
There are over 2.3 million veterans now living in California alone, with a large percentage of these based in San Diego, so VA financing plays a huge role in the CA housing market. I believe VA financing is the best purchase product available in the market today, as the VA makes it easy for their members to purchase a home with 100% financing and No monthly mortgage insurance. This list of VA frequently asked questions and VA tips will help you understand the in-and-outs of how the VA mortgage program works. I also included 4 tips below too that you can use to help get your VA offer accepted.
VA Loan Frequently Asked Questions
Who is eligible for VA financing?
A veteran is eligible for VA financing if he/she served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard and was honorably discharged after 24 continuous months of active duty, or the full period for which called, or ordered to active duty, but not less than 90 days (during wartime) or 181 continuous days (during peacetime).
Can VA Buyers Purchase With $0 Down?
Yes, VA buyers can get 100% financing here in San Diego to $500k? VA financing is still the only loan program that allows 100% financing in any area (FYI the USDA allows 100% financing, but this is strictly for rural properties).
As the FHA still requires a 3.5% down payment, and most conventional loan programs require down payments anywhere from 5% to 20% depending on the credit profile of the buyer, this is still putting home ownership out of reach for many buyers.
What is the Minimum Credit Score to Qualify For VA Financing?
Most VA lenders only need a 620 credit score to offer 100% VA financing. There are at least 2 VA lenders that will offer 100% financing with a 580 credit score. Also some VA lenders allow a buyer to qualify up to a 57% debt to income (DTI) ratio on VA loans, Fannie Mae is now capped at 45% in most cases.
Most banks have easier qualifying and credit guidelines for VA buyers. Because many first time buyers typically don’t have a lot of established credit, getting qualified for a conventional loan can be more difficult.
Do VA Buyers Pay Any Monthly Mortgage Insurance?
Another huge advantage for VA buyers is that they do not have to pay any monthly mortgage insurance (MI) on their loans, as VA loans are backed by the government. Remember all FHA loans require mortgage insurance. So having no monthly mortgage insurance allows VA buyers to have a lower monthly mortgage payment or purchase a bigger home.
What is the Maximum VA Loan I can Qualify For?
The VA offers financing based on county loan limits. For example, the VA offers 100% financing up to $527,500 for buyers in San Diego, and $668,750 for LA county and Orange County, and $417k for Riverside county.
*To borrow over the county loan limit, (which would be > purchase price of $527,500 in San Diego), there is a formula the VA uses to calculate what a VA buyers down payment requirement is.
How Are VA interest Rates Compared to Other Loan Programs?
VA mortgage rates are usually the lowest in the industry. For example, as of April 2014, we can get a buyer 3.875% with no points on 100% financing up to $417k (which is the VA conventional loan limit), or a rate of 4.25% comes with a lender credit that will cover ALL of a buyers closing costs. *Many Lenders Offer Assistance with the buyers closing costs.
Because the VA insures the loans for their members, they are able to offer lower rates to buyers. They are usually between .25%-.375% lower than conventional rates.
What is the VA Waiting Period after a Foreclosure, Short sale or Bankruptcy?
Short Sale: It is only 2 years before a buyer can repurchase again using VA financing.
Foreclosure: It is only 2 years before a buyer can repurchase again using VA financing.
Bankruptcy: For a chapter 7 Bankruptcy it is 2 years and 1 year for a chapter 13, before a buyer can repurchase again using VA financing.
Can I Buy an Investment Property With VA?
No, you can only purchase a primary residence using VA financing, no second or vacation homes either. But if you already own a home with VA financing on it, you can qualify again to purchase a new home with a VA loan.
I Support Our Troops, Let Me Help You Buy A Home
Because of the large number of veterans that are living in California, helping VA buyers plays an important role in the local housing markets.