Five Signs You Are A Great VA Loan Candidate
The VA home loan program has helped more than 20 million veterans since 1944. Do you think you might be a candidate for a VA loan? Below are five guidelines that will help you determine your eligibility.
Your Credit Score is at Least 620
The VA doesn’t actually have a credit score requirement, because they don’t make the loans – they insure them. VA-approved lenders, such as Veterans United, are the ones lending the money, and they can impose requirements beyond what the VA wants to see. One of the most significant is a qualifying credit score, which will vary from lender to lender depending on your unique situation. Right now VA lenders are looking for borrowers with a credit score of at least 620. You may need a higher score if you’re seeking a refinance loan or have had a recent bankruptcy or foreclo-sure. It’s also important to note that a co-borrower (that would be a spouse or another veteran in the case of VA loans) also needs a qualifying credit score.
You Have Steady Employment
Do you need a job to get a VA loan? Technically, no. Retirees do it all the time. But they also tend to have sources of income beyond a paycheck. Most veterans who aren’t quite ready for retirement will have to show lenders they have acceptable sources of stable, reliable income that’s likely to continue.
You Have a Good Balance of Debt to Income
Lenders are going to look at your debts as well as your income and calculate your monthly debt-to-income (DTI) ratio. Your major revolving expenses such as mortgage, car, or student loan payments would be taken into consideration. Generally, the VA wants to see a DTI ratio of 41 percent or less, which is a higher standard than that of conventional and FHA financing. It’s possible to have a greater ratio and still obtain a VA loan, but you would need to meet additional requirements regarding a unique VA standard called residual income, which is basically how much money you have left over each month after those major expenses for normal household needs.
No Recent Bankruptcies or Foreclosures
Experiencing a bankruptcy or foreclosure doesn’t exclude you from ever using your VA home loan benefits. But you may have to wait a bit or see your purchasing power diminished. You’ll generally need to wait at least two years from the date of your bankruptcy discharge to pursue a VA-backed mortgage. It’s the same for a foreclosure, a short sale, or a deed-in-lieu of foreclosure. Losing a VA mortgage to foreclosure doesn’t mean you automatically lose your benefits. It’s often more a question of how much VA loan entitlement you have left, since some is likely lost to that fore-closed property. Qualified borrowers can use what’s called second-tier or secondary entitlement to purchase again using the program.
You’ve Got Enough Cash for a Few Up-Front Costs
VA loans come with no down payment, which is an incredible benefit in the current housing market. Ninety percent of VA buyers purchase without having to put money down. But there are some costs you’ll likely need to front, although you’ll probably get some if not all of them back. One of those is earnest money, which is like a good faith deposit you make with a home seller. Another is the fee for an appraisal, which will determine the value of the property and whether it meets the VA’s Minimum Property Requirements. You should also spend money on a home inspection, although it isn’t mandatory.
Veterans United Home Loans of Hawaii is the State’s Number One VA dedicated lender. Over the past year the company has loaned over $190 million and helped more than 420 families achieve their dream of home ownership.
Veterans United Home Loans of Hawaii branch manager Tony Dias said, “We invite anyone considering applying for a VA loan to make an appointment to meet with one of our experienced lenders by calling 676-8254. They will analyze your current financial picture and come up with the best plan to help you achieve the goal of home ownership. There is no cost for a private consultation with a Veterans United lender. You can also attend one of our monthly free seminars on how to take advantage of your VA benefit.
“You’ve served us. Now let us serve you.”
Upcoming VA Loan Seminars
Veterans United seminars include Powerpoint presentations & free workbooks. Question and answer periods follow the presentations. For more information and directions, call 676-8254.
Tuesday, April 30
6 – 8 pm
Veterans United Home Loans of Hawaii Educational Center
94-539 Puahi St., Waipio, HI 96797
Saturday, May 4
10am – Noon
Special Town Seminar Dole Cannery Building
650 Iwilei Road, Suite 400 Honolulu, HI 96817