Our military veterans and their families sacrifice everything to serve and protect our country. While no one can ever fully repay them for their service, we can each do our part to honor them. As lenders and brokers, we can work together to help them obtain a home loan backed by the U.S. Department of Veterans Affairs (USDVA) – namely the Veterans Affairs (VA) loan. These loans have outstanding benefits for active service members, veterans, and their eligible surviving spouses. Let’s take a closer look at the VA loan.
Generally, a borrower must be an active service member, veteran, or surviving spouse of a veteran to qualify for a VA loan. Being a member of the National Guard/Reserve, or a cadet at a U.S. military academy will also work.
A minimum length of service applies in both cases:
A surviving spouse may also be eligible for a VA loan if their spouse was killed in the line of duty and the surviving spouse has not remarried. A key benefit of the VA loan is that one’s eligibility never expires once they meet these basic requirements.
The borrower must also obtain a Certificate of Eligibility (COE) through the USDVA automated system. To be clear, this only ensures that a borrower meets one of the thresholds for a VA loan. It does not serve as a VA loan approval. The COE basically ensures that the borrower meets the service requirements as noted above. A borrower who is an active service member, veteran, or surviving spouse of a veteran may not be able to obtain the COE if that service member received a non-honorable discharge, was discharged based on bad conduct, or was dishonorably discharged.
In terms of property types, borrowers may finance a detached house, condominium, multi-unit property, and/or manufactured homes. However, they must live in the home that is being purchased. Investment properties or secondary homes do not qualify.
As to underwriting requirements, there are no hard and fast rules. The USDVA has not established any minimum credit scores. Also, there are no maximum VA loan limit amounts. The Blue Water Navy Vietnam Veterans Act of 2019, which repealed loan limit amounts, became effective on January 1, 2020.
There are many reasons that you should consider recommending a VA loan to an eligible borrower.
First, there are no down payment requirements. On top of that, borrowers who do not have the money to pay a 20% down payment up front have no private mortgage insurance (PMI) requirements.
Since the VA loan is backed largely by the USDVA, there is built-in risk mitigation, which allows for more flexible credit underwriting. This allows lenders to offer rates that are very competitive and oftentimes lower than conventional mortgage rates. Even borrowers with little to no down payments, lower credit scores, and less cash flow may be able to obtain a loan. It’s just one way we’re able to say “thank you” to the great men and women in the line of duty.
At Caliber, we take great pride in serving our service members and their families. Caliber offers a wide variety of loan options, including VA loans, so we can truly meet the needs of our customers. Helping others realize their dreams of homeownership is our daily passion. We live it, we breathe it, we work it. Partner with us today.