The VA loan is a great benefit for our country’s veterans. It offers them the ability to purchase a home with very little money as the program does not require a down payment. Known as one of the safest loans on the market, the VA does their job in helping veterans take on a mortgage that is affordable and easy to maintain. Before you jump in headfirst into your VA mortgage, however, you should know the idiosyncrasies of getting a VA Loan to ensure that you know what you are getting yourself into.
You Must Live in the Home
The VA loan is strictly for owner occupied properties. This means you cannot use the loan to rent the home out to others or even to use as a vacation home. The idea behind the program is to help veterans have affordable housing. There are loopholes in this requirement, however. If you get transferred after moving into the home and it is not within a reasonable distance to the home you purchased, you can rent the home out with repercussions. There is no requirement stating how long you must remain in the home once you purchase it, so as long as you live in the home for a reasonable time, you will not be accused of fraudulently using your benefits.
You Need Disposable Income
The VA requires you to have disposable income. In fact, they rate this factor much higher than the need for having reserves, like conventional and FHA programs require. What the VA wants to know is that this new loan is not going to make it difficult for you to live day-to-day. This is why it is considered one of the safest loans on the market because the VA is choosy about who they give the loan to, not based on debt ratio alone, but on the amount of money that is left each month for daily living expenses. The VA will not give a loan to someone that will not have the designated amount of residual income for their area. You can find the required amount of reserves for your area right on the VA’s website. This does not mean you will never get a VA loan; it means that you might be limited in the amount you receive.
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Your Credit Score does Matter
Most people think that a VA loan does not require a high credit score, and they are right. It is one of the most flexible programs available, but that is speaking for the VA, not the lender. Every lender can add their own requirements to the loan since they are the ones providing the funds, not the VA. The VA guarantees the loan for the lender, giving lenders more leeway in who they can provide loans to despite a slightly higher risk. That being said, do not assume that you can get a VA loan wherever you go; every bank will have their own requirements that you will have to meet in order to be eligible. If one bank has requirements that are too high for you to meet, though, shop with another lender to see if they have more relaxed requirements.
The Home Must be in Good Condition
Every loan, such as a conventional or FHA loan needs an appraisal, just like the VA loan does. What is different with the VA program is that the VA does not care about the cosmetic appearance of the house; they care about its safety and cleanliness. An inspection will be conducted to ensure that it meets the minimum requirements of the VA, which basically gives the lender peace of mind that the home is in good condition and will not pose a threat to anyone that lives there. This is another reason VA loans are such a safe loan – they are always on the lookout for the borrower.
Our veterans deserve a program that enables them to have affordable housing without maxing out their monthly finances. The VA loan is a fantastic program that many lenders offer. How they offer it and who they offer it to might differ, but knowing that there is a program out there should help you find a willing lender that will accept your conditions and enable you to purchase the home you desire.
