If you have served in the U.S. military or are presently serving, you can get a loan backed by the U.S. Department of Veteran’s Affairs (VA) to finance up to 100 percent of your home’s value with no mortgage insurance and no prepayment penalty. You can even finance most of your closing costs.
VA doesn’t make loans, they just back the loans, which is why you can borrow 100 percent of a home’s value at great rates with no mortgage insurance. But they only allow lenders to make VA loans to buy a primary residence.
Those who are eligible for VA loans include:
If you’re in any of these categories, you will need to provide a Certificate of Eligibility (COE) to your lender to verify that you’re eligible for a VA loan. The COEs for each category of eligible VA borrower have different requirements.
An expert VA lender can also help you obtain the correct COE based on your circumstances.
Once you’ve obtained your COE, a VA lender will approve you in much the same way they would any other borrower. They’ll calculate your total proposed monthly housing cost plus all other monthly debt (like payments on credit cards, cars, and student loans) relative to your income. Usually lenders will want all your housing and non-housing bills to be 43 percent or less of your monthly income, but some lenders may be more flexible.
Lenders will also look at your credit scores. Each lender will vary in terms of the credit score they require, but generally a score of 620 or better is required for you to qualify for a VA loan.
VA loans will finance up to 100 percent of a home’s value. The national loan limit is $424,100 for 2017, but can go up to $1,000,000 in high cost areas. These limits can go slightly higher when you consider that VA loans also allow a borrower to finance certain closing costs on top of the loan limits.
The closing costs that are eligible to finance are appraisal, credit report, title insurance, lender origination fee, recording fees, and survey fees. These represent the bulk of the closing costs in most home purchase transactions.
VA guaranty limit for the Toledo area is $424,100, and our guy, Doug Swartz at Hallmark Home Mortgage can also discuss the program with you in detail. You can reach Doug by email at Dswartz@1Hallmark.com or by phone at 567-703-1195.
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