The transition from military to civilian life can be difficult. Thankfully, there are a wealth of programs designed to help veterans make the most of their new lives out of uniform. In particular, the government has teamed up with mortgage providers to make purchasing a house easier and more affordable for those who have served their country.
The VA Loan Program
The VA Loan Program encourages home ownership among current and former servicemen and women by offering a number of cost-saving benefits. Along with the outstanding advantages, however, come a distinct application process and special set of qualifications. That means that in order to take advantage of any savings, you’ll first have to acquaint yourself with the specific benefits and conditions that apply to a VA mortgage.
The VA Loan Program provides at least three benefits to potential homeowners. Those include zero down payments, no mortgage and insurance rates, relaxed credit standards, and an easier qualification process.
Zero Down – The most challenging part of purchasing a home, particularly for new buyers, is coming up with the money for a down payment. For veterans and retired veterans who may be moving into their first civilian job, it can be just as frustrating, if not more so.
The VA Loan Program was implemented to ease this burden on soldiers. It allows veterans to purchase a home without making a down payment. So far, nine in ten soldiers have made a deal without putting anything down upfront. Although you’ll still have to pre-approve for a mortgage like everyone else, a zero down deal combined with no monthly insurance rates makes it more painless than ever to move into your first home.
Reusable Benefits – Although many veterans use the special loan program to move into their first home, there’s nothing that says they can’t reuse their benefits when they buy their second or third homes. According to Veterans United, VA loan benefits are not a one-time deal. Some ex-service members even manage to secure two VA loans at the same time. Speak with your mortgage company to determine if you can apply for an additional home loan.
The good news is that many veterans and even some spouses qualify for the VA Loan Program. Of course, you’ll first have to prove your eligibility, and that means showing that you have:
- Served 90 consecutive days of active service during wartime
- Served 181 days of active service during peacetime
- Completed more than 6 years of service in the National Guard or the Reserves
- Had a spouse who was a service member who died in the line of duty or from a service-related disability
Certificate of Eligibility – At some point during the lending process, you’ll have to hand your mortgage broker a VA Certificate of Eligibility (COE). The COE verifies the length and nature of your service so your mortgage provider can confirm that you are in fact qualified to receive a loan under these special conditions. You won’t necessarily need to show your COE at the beginning of the loan process, but it’s better to contact the VA early in order to get the ball rolling. That way, you’ll be in good shape if there are any delays in processing your documents.
Prequalify for a Mortgage – In addition to proving your eligibility, you will also have to qualify for the mortgage like all other homebuyers. That means you’ll have to pass a credit check, and prove that you have a steady and large enough income to support the monthly mortgage payments. You’ll also need to show your mortgage lender that you’ve been employed for at least two years. There are exceptions to this so be sure to ask your lender if you would qualify.
Residual Income Requirement – A VA Loan requires you to meet one extra condition: a residual income check. Residual income is what you have left after you’ve made your monthly mortgage payment. Basically, the VA wants to know that you’ll still be able to afford necessities like food and transportation after figuring in the cost of the home. It may seem like an extra burden to prove the existence of residual income, but the additional requirement is a major reason VA Loans have one of the lowest foreclosure rates in the country.
A and N Mortgage Can Help
If you’re a veteran who is looking to take advantage of the benefits that come with a VA loan, contact A and N Mortgage to talk to our lenders. You can also fill out an online mortgage application to see if you pre-approve for a mortgage.