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VA Mortgage Loan Requirements

What is a VA Mortgage Loan?
VA stands for Veterans Administration. A Veterans Administration loan provides low-cost insured home mortgage loans that suit a variety of options.

What are the VA Mortgage Loan Requirements?
To decide if you qualify for a VA Mortgage Loan, the following will be looked at:

  • Your income and your monthly expenses. VA uses two methods for income qualification purposes. The primary method of evaluating a veteran's income is the residual income method and a 41% total debt to income ratio.
  • Your credit history (this is important, but VA's credit standards are flexible). A FICO score of 620 or above is very helpful in obtaining an approval.
  • Your overall pattern rather than to individual problems you may have had.



VA uses two methods for income qualification purposes. The primary method of evaluating a veteran's income is the residual income method. Under this method, the underwriter determines that a veteran has sufficient income to cover day-to-day living expenses after paying housing expenses, taxes, and other debts such as car payments and credit card payments. VA also uses a debt-to-income ratio method like many programs. However, VA uses only one ratio (41%) which is the ratio of total debt (both housing and other debt) to income.

Additionally, to meet current VA loan qualifications your military service must meet the following requirements:

Military Service Requirements for VA Loan Eligibility:

Note:  Applications involving other than honorable discharges will usually require further development by VA.  This is necessary to determine if the service was under other than dishonorable conditions.

Wartime - Service During:

  • WWII: 9/16/1940 to 7/25/1947
  • Korean: 6/27/1950 to 1/31/1955
  • Vietnam: 8/5/1964 to 5/7/1975

You must have at least 90 days on active duty and been discharged under other than dishonorable conditions.  If you served less than 90 days, you may be eligible if discharged for a service connected disability.

Peacetime - Service During:

  • 7/26/1947 to 6/26/1950
  • 2/1/1955 to 8/4/1964
  • 5/8/1975 to 9/7/1980 (Enlisted)
  • 5/8/1975 to 10/16/1981 (Officer)

You must have served at least 181 days of continuous active duty and been discharged under other than dishonorable conditions.  If you served less than 181 days, you may be eligible if discharged for a service connected disability.

Service after 9/7/1980 (enlisted) or 10/16/1981 (officer):

If you were separated from service which began after these dates, you must have:

  • Completed 24 months of continuous active duty or the full period (at least 181 days) for which you were ordered or called to active duty and been discharged under conditions other than dishonorable, or
  • Completed at least 181 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1171 (Early Out), or have been determined to have a compensated service-connected disability;
  • Been discharged with less than 181 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances for the convenience of the Government.

Gulf War - Service during period 8/2/1990 to date yet to be determined

If you served on active duty during the Gulf War, you must have:

  • Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or
  • Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compassable service-connected disability, or
  • Been discharged with less than 90 days of service for a service-connected disability.  Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

Active Duty Service Personnel

If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

Selected Reserves or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

  • Were discharged with an honorable discharge, or
  • Were placed on the retired list, or
  • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or
  • Continue to serve in the Selected Reserves

Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability.

You May also be determined eligible if you:

  • Are an un remarried spouse of a veteran who died while in service or from a service connected disability, or
  • Are a spouse of a serviceperson missing in action or a prisoner of war

Note:  Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit.  However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility.  VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.

Eligibility may also be established for:

  • Certain United States citizens who served in the armed forces of a government allied with the United States in WW II.
  • Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.

Can I get a VA Mortgage Loan after bankruptcy?
Criteria for VA loan approvals state that if you have been discharged from a Chapter 7 bankruptcy for two years or more, you are eligible to apply for a VA mortgage. If you are in a Chapter 13 bankruptcy and have made all court approved payments on time and as agreed for at least one year, you are also eligible to make a VA loan application.

What are the VA Down Payment Requirements?
VA loans have no down payment requirement up to $417,000 in most counties. Other loan requirements don't allow for this.

What types of property are eligible?
While VA Mortgage Guidelines do require that the property be Owner Occupied (OO), VA Loan Requirements do allow you to purchase condos, planned unit developments, manufactured homes, and 1-4 family residences, in which the borrower intends to occupy one part of the multi-unit residence.

What is the maximum amount that I can borrow?
The maximum amount for a VA Mortgage Loans are determined by:

Maximum loan amount: By law, VA cannot insure loans that exceed certain amounts based on the metropolitan area or county in which you live. The highest maximum VA home loan right now is $1,094,625. The lowest maximum amount available in any county is $471,000. To see what the limit is in the county in which you're interested, visit the following site http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf. This site lists U.S. territories as well as states.

Maximum financing: The maximum VA Mortgage amount will be 100% of either the appraised value of the home or its selling price, whichever is lower.

What kinds of loans does VA offer?
Fixed rate loans -
Most VA loans are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same during the whole loan period, normally 30 years. The advantage of a fixed-rate mortgage is that you always know exactly how much your monthly payment will be, and you can plan for it.

Adjustable rate loans
- Most first-time home buyers are a little stretched financially, so they want payments as low as possible at the beginning. With VA's adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. VA uses the 1-Year Constant Maturity Treasury Index (1 Yr CMT the most widely used index, to calculate the changes in interest rates. An index is a measure of interest rate changes that determine how much the interest rate on an ARM will change over time.

The maximum amount that the interest rate on your loan may increase or decrease in any one year is 1 or 2 percentage points, depending upon the type of ARM you choose. Over the life of the loan, the maximum interest rate change is 5 or 6 percentage points from the initial rate, again depending upon the type of ARM you choose. The advantage of an ARM is that you may be able to afford more house because your initial interest rate will be lower, as will your payment.

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 Why choose a VA Loan?

  • VA Mortgages require no down payment.
  • There are no prepayment penalties for a VA Mortgage.
  • VA Loans have no private mortgage insurance (PMI).
  • A VA Home Loan is eligible for an interest rate reduction loan, or "streamline" refinance.
  • A VA Mortgage is available all areas of the country, provided a market exists for the property and the home meets HUD's minimum property standards.
  • A VA Home Loan may be used to purchase or refinance a new or existing one to four family home.
  • VA Mortgages are offered at terms of 15 or 30 years.


. What types of VA Mortgages are available?

Fixed Rate Mortgage
Most VA mortgages are fixed-rate mortgages. In a fixed rate mortgage, your interest rate stays the same for the entire loan period. With a fixed rate VA Mortgage, you always know exactly how much your monthly payment will be. The Daily VA Mortgage Rate is usually better a conforming 30 year fixed rate with no points and daily VA rate with points is even better. Contact us for today's free VA mortgage rates.

Adjustable Rate Mortgage
With VA's adjustable rate mortgage (ARM), the initial interest rate and monthly payments are low, but these may change during the life of the loan. VA uses the 1-Year Constant Maturity Treasury Index (1 Yr CMT), the most widely used index, to calculate the changes in interest rates.

The maximum amount that the interest rate that an ARM VA Mortgage may increase or decrease in any one year is 1 percentage point. Over the life of the loan, the maximum interest rate change is 5 percentage points over the initial interest rate.

. I have already obtained one VA loan. Can I get another one?

Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.




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