Purchasing With A VA Loan Criteria
ELIGIBLE PROPERTY TYPES
1 – 4-unit properties
Condominiums â per VA guidelines and must be on VA approved list.
- In order to be considered for approval of a VA home loan, income stability is a mandatory requirement
- Veterans recently separated from the service must have a minimum 2 year work history in the same line of work that he/she did in the service. The veteran should be in his/her most recent job for at least 12 months.
- Rental Income *** Rental income verified as stable and reliable may be included in effective income. Must have prior experience managing rental units or other background involving both property maintenance and rental.
- Rental Income *** Multi Unit Property Securing the VA Loan (2-4 units) cash reserves totaling at least 6 months PITI
- 75% of verified Rental history, or the appraisers opinion of market rent
- Rental Income*** Property the applicant occupied prior to the new VA Loan, use the prospective rental income to offset the mortgage payment only It may only be used to offset the mortgage payment on the departed residence.
- If no rental income is needed to support PITI - no cash reserves needed!
MAXIMUM FINANCED PROPERTIES
The maximum number of financed properties that the borrower can have is 4. However, the borrower must still have remaining VA eligibility for a VA loan.
A gift letter, source of funds and evidence of transfer of gift funds is required.
100% for Purchase transactions
100% for Refinance transactions
100% for IRRRL Refinance transactions
MAXIMUM LOAN AMOUNTS, MINIMUM FICO SCORE AND RESERVE REQUIREMENTS
- Base Loan Amount - Up to the applicable county loan limit for the subject property - including high cost counties
Minimum FICO - 600
Required Reserves - none
- If Base Loan Amount - Above County Loan Limit - $750,000
Minimum FICO - 640
Required Reserves - 2 Months PITI
- If Base Loan Amount - $750,001 - $1,000,000
Minimum FICO - 680
Required Reserves - 4 Months PITI
- If Base Loan Amount - $1,000,001 - $1,200,000
Minimum FICO - 720
Required Reserves - 6 Months PITI
Owner-occupied, primary residences are allowed. Second homes or investment properties are not allowed.
RESERVES – must be liquid, readily accessible funds (non - retirement ) Cash reserves are required under the following circumstances:
- If the borrower uses rental income to qualify and the subject property is 2-4 units, six (6) months cash reserves
- If the borrower uses rental income from other rental property(s), three (3) months cash reserves must be documented.
- Please refer to “Maximum Loan Amounts, Minimum FICO, and Reserve Requirements” section for any additional restrictions due to loan size.
Up to 4% of the purchase price.
Interest Rate Reduction Refinance Loan for Veterans.
The VA Interest Rate Reduction Refinance Loan (IRRRL) lowers your interest rate by refinancing your existing VA loan. By reducing your interest rate, your monthly mortgage payment should decrease. You can also refinance an adjustable rate mortgage (ARM) into a fixed rate mortgage.
- No appraisal or credit underwriting package is required when applying for an IRRRL.
- An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
- When refinancing from an existing VA ARM loan to a fixed rate loan, the interest rate may increase.
- No CASH OUT with IRRRL
- 6 month mortgage history required.
- No credit underwriting is required as long as....... Existing loan must not be past due more than 30 days, or the payment doesn't increase by more than 20% if reducing term.
- Credit pulled with a required score of 600.
- May not extend term of the refinance more than 10 years from original term.
IRRRL Refinancing & Cash Out Refinancing A VA Loan
- Must have an existing lien to cash out
- There must be no late payments for the previous 12 months
- Typically allow 90% Value for Cash Out
- 100% Value of;
- Buying out spouse - verified with court order
- Consolidating existing debt & reducing monthly payments
- Payment of any property related liens
- Use for property improvement - requires contractor bid
- 100% value -$500 or less cash at closing to be given
- "Cash Out Letter" explaining the use of the funds.
Here are some of the locations with the highest density of Veterans; Virginia Beach, Norfolk, Riverside, San Bernardino, San Diego, Carlsbad, Las Vegas, Dallas, San Antonio, Fort Worth, Arlington, Jacksonville, Richmond, Memphis, Tucson, Mesa, Albuquerque, Washington DC, Seattle, Arlington, Tampa, Baltimore, Houston, Atlanta, Ventura, Omaha, Bakersfield, Dayton, Columbia, Colorado Springs, Aurora, Oklahoma City, Honolulu, Denver, El Paso, Kansas City, Wichita, Louisville,Cleveland, Raleigh, Pittsburg, Tulsa, Minneapolis, Charleston are all area's with a high population of veterans, and some of the areas that we lend in!
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