VA Home Loans

What is a VA Home Loan?

This loan product helps qualified veterans, reservists, active-duty service members, and their spouses take advantage of zero down-payment requirements and low mortgage rates. The loan is backed by the U.S. Department of Veterans Affairs (VA) and offers several advantages compared to traditional home loans.

Eligible borrowers can purchase, construct or refinance an existing home loan (up to 100% LTV) with no monthly mortgage insurance premiums.

A VA Home Loan is a great benefit to those who have served our country. It not only provides them with the opportunity to own their own home but also does so with some very favorable mortgage terms.

What are the Benefits of a VA Home Loan?

The VA Home Loan program offers numerous benefits for eligible service members, veterans, and their families. Here’s a comprehensive look at the advantages of securing a VA Home Loan:

• No Down Payment: Bid farewell to the burden of hefty down payments. A VA home loan eliminates the need for a down payment, freeing you from the obligation of having to save substantial amounts before making a home purchase.

• Competative Interest Rates: VA Home Loans often come with lower interest rates compared to Conventional loans. This means lower monthly payments and reduced costs over the life of the loan.

• No Private Mortgage Insurance (PMI): Unlike many Conventional and FHA home loans, VA Home Loans do not require private mortgage insurance (PMI). This can lead to substantial savings each month, as PMI premiums can add a significant amount to your monthly mortgage payments.

• Flexible Credit and Qualifying Requirements: VA loans generally have more relaxed credit score standards. This flexibility can be particularly beneficial for those who may have experienced financial challenges or have less-than-perfect credit.

• Limited Closing Costs: The VA imposes limits on the closing costs that can be charged to borrowers, which helps to keep upfront expenses manageable for your home purchase or refinance. The origination fee is capped at 1% of the total loan amount for "borrower paid" transactions. This limitation ensures that the origination fee remains reasonable and fair. This approach guarantees that the costs associated with obtaining a VA loan remain competitive and comparable to other mortgage options. In some cases, the seller may even agree to pay a portion of your closing costs.

• VA Funding Fee "Exemption": Certain borrowers may qualify for an exemption from the VA funding fee on a VA home loan. This exemption is generally available to veterans with a service-connected disability rating of 10% or higher, as well as to the surviving spouses of service members who either died in service or from a service-connected disability. Additionally, active duty members who have been awarded the Purple Heart are also eligible. This exemption eliminates the one-time upfront funding fee typically associated with VA home loans, potentially lowering the overall cost of the loan.

• Assumable Loans: VA loans are assumable, which means that if you sell your home, the buyer can take over your existing VA loan, provided they qualify. This can be an attractive feature for potential buyers, especially if your loan has favorable terms.

• Supportive Resources: The VA provides a wealth of resources and housing assistance to guide veterans through the home-buying process. This includes counseling and advice to help you make informed decisions and navigate any challenges.

• Foreclosure Avoidance: The VA offers assistance to borrowers who are struggling to make their mortgage payments, including foreclosure avoidance programs and financial counseling.

How Do You Qualify for a VA Home Loan?

Qualifying for a VA Home Loan involves meeting specific eligibility criteria set by the U.S. Department of Veterans Affairs (VA). Here’s a detailed guide on the requirements to help you determine if you’re eligible for this valuable mortgage benefit:

• Active Duty Service Members: Must have served at least 90 continuous days on active duty during wartime, OR served at least 181 days of active duty during peacetime.

• Veterans: You should have been honorably discharged after serving a minimum amount of time. The VA publishes the The minimum active-duty service requirements by dates of service on their website.

• National Guard and Reserve Members: Eligibility is available if you have completed six years of service or have been called to active duty.

• Surviving Spouses: Spouses of service members who died in the line of duty or due to a service-connected disability may also be eligible.

In addition, you must meet the following credit criteria:

What if I don’t meet the minimum service requirements?

The VA recognizes specific discharge circumstances that could still qualify you for the benefits of a VA Home Loan. You need to have been discharged from the VA for one of the following reasons:

• Financial Hardship, or

• The convenience of the government (you must have served at least 20 months of a 2-year enlistment), or

• Early out (you must have served 21 months of a 2-year enlistment), or

• Reduction in forces, or

• Certain medical conditions, or

• A service-connected disability (a disability related to your military service)

How Does a VA Home Loan Work?

A VA home loan is a mortgage that is guaranteed by the United States Department of Veterans Affairs (VA). The VA does not actually lend the money for the mortgage, but they do insure the loan in case the borrower defaults. This insurance allows lenders to offer more favorable terms to borrowers, including zero down-payments and low-interest rates.

How to Apply for a VA Home Loan?

Applying for a VA home loan with a mortgage broker is a straightforward process, but it requires a clear understanding of the steps involved. Here's are some steps to help you navigate the process:

• Confirming Your Eligibility: Before you begin the application process, ensure that you meet the eligibility criteria for a VA home loan. You will need to obtain a Certificate of Eligibility (COE) from the Department of Veterans Affairs, which confirms your entitlement to VA loan benefits. Onshore Mortgage will assist you in your COE. If we are unable to access your information through the automated system, we may need further documentation in order to request a "manual review" from the VA regional office.

• Loan Prequalification: This involves providing Onshore Mortgage, LLC your financial information, including income, credit history, and employment status. We will send the file to one of our approved VA Lenders who will assess your financial situation and provide an estimate of how much you can borrow. Prequalification is not a guarantee of loan approval, but it gives you an idea of your borrowing power and shows sellers that you are a serious buyer.

• Gather Required Documentation And Loan Submission: To move forward with the VA application and have your file submitted into underwriting for an approval, you’ll need to gather some essential loan documents. These typically include: your Certificate of Eligibility (COE), proof of income (pay stubs, tax returns), bank statements, DD-214 and credit report. Onshore Mortgage will provide you with a detailed list of the documents and help you compile them.

• Ording The VA Appraisal: After submitting your application, Onshore Mortgage will order a VA appraisal of the property you wish to purchase. The VA appraisal ensures that the property meets the minimum property requirements set by the Department of Veterans Affairs and determines its fair market value. Onshore Mortgage will coordinate this process with the listing agent and keep you informed of any issues that arise during the appraisal. As a gesture of appreciation to our Veterans, Onshore Mortgage will cover the cost of the appraisal upfront, with reimbursement occurring at closing only if the loan successfully closes.

• Underwriting and Approval: Once the appraisal is complete, your loan application moves to the underwriting stage. During this phase, the lender’s underwriter will review all the details of your application, including your financial information, credit history, title work and the VA appraisal report. The underwriter may request additional documentation or clarification on certain points. Once all conditions are satified your loan will be "cleared-to-close"

• Closing: If your loan is cleared-to-close, the final step is closing. Onshore will work with the buying and listing Realtors to coordinate a date, time and place for your closing. During the closing, you'll sign all the necessary documents, including the lenders loan documents, mortgage, note, deed and pay any closing costs that may be required in the form of a "bank certified" check. Once the closing is complete, the loan funds will be disbursed, and you’ll officially own your new home.

How Many Times Can You Use the VA Home Loan?

You can use your VA home loan benefits multiple times. However, you have to keep this in mind:

• It is usually challenging to qualify for an additional VA loans before selling your current home, as the sale might not be complete and your entitlement might not have been restored. However, there are some cases where obtaining another VA loan without selling your existing home is possible, particularly if you can secure a new property without relying on the sale proceeds for a down payment. If you choose to buy a new home without selling your current one, you'll need to be aware of VA regulations regarding subsequent purchases and remaining entitlement. For instance, you might need to make a down payment on any amount that exceeds the loan limit. Onshore Mortgage can assist you in understanding how your remaining entitlement impacts the terms of your new VA home loan.

• On most VA Home Loans, outstanding balances on any current VA loan must be paid in full before you can take out another one. This can be done as a “same day” transaction (sale then new purchase).

The advantages of a VA Home Loan extend far beyond these initial highlights. Understanding the VA loan timeline is crucial for navigating the application and approval process effectively. Our goal is to assist you in finding the perfect loan solution that meets your needs, ensuring a smooth and efficient path to closing. If you're considering a VA home loan, be sure to contact Onshore Mortgage to learn more about the loan process and how to qualify.

*Credit and income restrictions do apply. Please visit our Disclosures page for a detailed breakdown of all loan types.