History of the VA Loan<\/h3>\n
The VA loan<\/a> was created in 1944 as part of the Servicemen\u2019s Readjustment Act.\u00a0<\/span>The intent was to ensure service members who had been away at war could buy a home. <\/span>You may be eligible for a VA home loan if you meet one or more of the following conditions:<\/span><\/p>\n There are other stipulations too, such as the need to have received a \u201cgeneral\u201d discharge or better.<\/span><\/p>\n The first step in getting a VA home loan is to apply for a Certificate of Eligibility (COE). <\/span>For veterans, this will require a copy of your Discharge or Separation Documents (DD Form 214). <\/span>For active-duty service members, this will require a statement of service signed by your commander (or by direction) and other personally identifiable information.<\/span><\/p>\n Related<\/strong><\/em>: What Is a VA Loan and Why Should I Consider Using One?<\/a><\/em><\/p>\n For current or former members of the National Guard or Reserves, you will need the above paperwork, plus some additional documentation to verify the amount of time you have served. <\/span>Luckily, our service members are used to lots of paperwork. <\/span>You can get your Certificate of Eligibility online through the <\/span>eBenefits portal<\/span><\/a>.<\/span><\/p>\n There are three ways to obtain financing:<\/span><\/p>\n What is really crazy about this last opportunity is that you can actually purchase more than four units if done correctly. VA Pamphlet 26-7, Revised, states that \u201cif a property is to be owned by two or more eligible veterans, it may consist of four family units and one business unit, plus one additional unit for each veteran participating in the ownership.\u201d<\/span><\/p>\n The VA loan does not have any requirement for a minimum credit score. <\/span>However, most lenders will have their own minimum credit score requirements. <\/span>As with any lending opportunities, higher credit scores mean better lending terms.<\/span><\/p>\n The VA home loan is a primary residence mortgage.\u00a0<\/span>Sorry, everyone, the VA loan was not intended to be used for investment properties. <\/span>That being said, there are definitely ways for you to invest with the VA loan.\u00a0<\/span><\/p>\n Don\u2019t do anything illegal, and definitely do not commit mortgage fraud. I would hate to see this benefit go away because service members were abusing it. <\/span>You must intend to occupy the property as your primary residence for a reasonable amount of time, generally assumed to be one year.<\/span><\/p>\n Related<\/strong><\/em>: 3 Strategies We Used to Live-In Flip Our Way to Success with the VA Loan<\/em><\/a><\/p>\n You may be asking, \u201cBut what if I get orders?\u201d <\/span>Don\u2019t worry, the VA home loan is a benefit, and it isn\u2019t out to get you! <\/span>If you get permanent change of station (PCS) orders to move, you may do so without penalty.<\/span><\/p>\n If you bought a house in North Carolina because you were in receipt of orders to get stationed there in two months, and then those orders changed\u2026you\u2019re safe! <\/span>There are countless other situations that can arise, but you must intend to occupy the home for a reasonable amount of time when you purchase it.<\/span><\/p>\n I was going to write a detailed paragraph here about the loan limits and how they vary around the country\u2026but<\/span>, effective Jan. 1, 2020, the VA loan limits will cease to exist! <\/span><\/p>\n We will have to wait and see what lenders do with this going forward (how debt-to-income requirements may change, what limits may be placed on the loan from lenders, etc.) <\/span>Either way, this is a huge step for the VA loan, and I\u2019m excited to see what opportunities this opens for us!<\/span><\/p>\n This funding fee is a downside to the VA loan, but<\/span>\u00a0isn\u2019t that<\/em> bad. <\/span>The funding fee for active duty is 2.15 percent of the purchase price for your first VA loan and 3.3 percent for subsequent VA loans.\u00a0<\/span><\/p>\n On a $200,000 property, this fee is only $5,020! <\/span>When added to the loan, this equates to roughly $25.10\/month added to your payment.<\/span><\/p>\n In my opinion, paying $12.55\/month for every $100,000 in loan amount is absolutely worth not paying the 20 percent down payment required by conventional mortgages. <\/span>The funding fee is also waived for any veteran with a disability rating of at least 10 percent.<\/span><\/p>\n There is no PMI on a VA loan!<\/span><\/p>\n The Department of Veteran Affairs has a list of Minimum Property Requirements (MPRs) that a home must meet in order to qualify for a VA loan.\u00a0<\/span>Inspectors are looking for major issues to ensure the house meets safety, sanitation, and structural integrity requirements.<\/span><\/p>\n This includes heat and\/or air-conditioning (where necessary), electricity, kitchen function, plumbing, etc.\u00a0<\/span><\/p>\n Some other requirements are:<\/span><\/p>\n Ultimately, the home needs to be inhabitable and safe for your family to own.\u00a0<\/span>These rules are in place to protect service members and military families! <\/span>Condominiums and Condominium Property Regimes (CPRs), must be <\/span>VA-approved<\/span><\/a> in order to qualify.\u00a0<\/span><\/p>\n These are several exceptions\u2014not an exclusive list\u2014to the above requirements, but you will need to articulate these to your inspector\/appraiser in order to ensure they work with you.<\/span><\/p>\n There is a VA Energy-Efficient Mortgage (EEM) home loan option. <\/span>This program allows the homebuyer to add up to $6,000 to the loan for energy-efficient upgrades. This can be done either at purchase or refinance. <\/span><\/p>\n The determining factor for approval is if the amount of money saved monthly by these upgrades is greater than the amount of money it will add to your mortgage payment.\u00a0<\/span><\/p>\n\n
Certificate of Eligibility<\/h3>\n
Obtaining Financing<\/h3>\n
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Credit Requirements<\/h3>\n
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<\/p>\nNot an Investment Loan<\/h3>\n
Military Exceptions<\/h3>\n
VA Loan Limits<\/h3>\n
The Funding Fee<\/h3>\n
Private Mortgage Insurance<\/h3>\n
What Can You Use the VA Loan for?<\/h2>\n
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Minimum Property Requirements<\/h3>\n
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What Are the Loopholes?<\/h3>\n
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Energy-Efficient Upgrades<\/h3>\n
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