If you served in the military, you may have access to the VA home loan benefit.
This great government-backed program provides 100% financing and flexible guidelines.
Veterans throughout the Louisiana area can use this program to buy the home of their dreams with no down payment.
Keep reading to learn how the VA loan can help you.
The VA doesn’t write or fund VA loans. Instead, you get the loan from a VA-approved lender.
The VA guarantees the loan. In other words, they pay the lender back if you default on the loan.
The guarantee allows lenders to fund loans with flexible underwriting guidelines.
The VA sets the parameters for the loans, but each VA lender sets its own guidelines too.
You may find some lenders with ‘special requirements,’ but we help you navigate those issues.
We help you find the VA loan that is the most affordable and helps you reach your homeownership goals.
The VA loan has one unique aspect – you must be eligible for it. Not everyone is eligible. First, you must either be a veteran or active in the military. Next, you must meet the service requirements:
Next, your discharge must be under anything other than ‘dishonorable.’
If you meet these requirements, you should have VA home loan entitlement.
The VA provides a Certificate of Eligibility if you are eligible. Lenders need this COE to determine how much loan you are eligible to receive with the VA guarantee.
The entitlement is the amount the VA will guarantee your loan. The VA guarantees 25% of the loan amount up to the national conforming amount of $484,350. Each eligible veteran starts with full entitlement.
Once you buy a home, the VA deducts the used entitlement.
For example, if you buy a $250,000 home, you use up $62,500 in entitlement ($250,000 x 25%). That leaves you with $58,587 in remaining entitlement.
The used entitlement remains tied to the home for the life of the loan. Once you pay off the loan and sell the home, you can petition the VA to reinstate the entitlement. You can then reuse your entitlement to buy another home.
VA home loans have flexible underwriting guidelines, making it easy for veterans to secure a home loan. if you know you’re eligible for benefits, consider the following qualification guidelines:
Despite its flexible guidelines, the VA has strict appraisal guidelines. The guidelines are in place to ensure that you buy a stable and secure home.
Sellers often fear the VA appraisal, but it’s not much different than a standard appraisal. Yes, the VA has specific points the appraisal must hit, but most homes in ‘decent condition’ pass the appraisal.
The home must be safe, sound, and sanitary. The VA puts the requirements in place to help you avoid buying a home that becomes a ‘money pit.’
The point behind the VA loan is to help you get the house you desire with as little money out of pocket as possible.
The down payment is where you get the most benefits out of your VA loan. You don’t actually need a down payment.
You can borrow as much as the home is worth, assuming the appraised value is at least as much as the purchase price.
Some VA loan borrowers decide to put money down on the VA loan and that’s okay.
Investing your own money into the home helps you earn equity in the home faster. It’s not a requirement, but it is a possibility as long as you can prove the funds’ origination.
The lender must determine the funds belong to you and aren’t borrowed funds that require repayment.
The VA has lenient guidelines regarding buying a home after bankruptcy or foreclosure.
Typically, you need two years of ‘clean credit’ to qualify. This means two years from the date of the bankruptcy discharge or the foreclosure sale.
If you use that time to make good on your debts and pay your bills on time, your credit score should increase accordingly.
There is one exception. If you defaulted on a VA home loan, you lose that portion of your entitlement.
Let’s say you lost a $150,000 home. You would lose the $37,500 in entitlement.
Now, because the VA does provide $121,087 in entitlement, you may still have enough entitlement to buy another home, once you qualify and wait the required two years.
The VA allows sellers to contribute up to 4% of the home’s sales price in seller concessions.
If you buy a $200,000 home, the seller can help with up to $8,000 in closing costs.
This helps reduce the amount of cash you need out of pocket at the closing.
The 4% limit pertains to only certain closing costs, though. They include:
If you pay any discount points, the 4% limit does not pertain to them.
Despite the fact that the VA provides 100% financing, they don’t require mortgage insurance.
That’s just another benefit that Louisiana veterans can enjoy.
Your monthly payment only consists of principal, interest, real estate taxes, and homeowners insurance.
You will, however, pay a funding fee. This is a one-time fee charged by the VA.
You pay it in cash at the closing. If you can’t pay it, the seller can pay it for you, or you can wrap it into your loan amount if there’s room between the sales price and appraised value.
The amount of the VA funding fee depends on the amount of your down payment:
The VA also has great refinance options. Whether you have a current VA loan or not, you can use your VA home loan benefits for either of the following programs:
If you are a veteran in the Louisiana area, let us help you in your home buying process. We’ll help you find the right VA loan for your needs.
With no down payment and flexible underwriting guidelines, we can help you buy the home of your dreams!
Getting Pre-Approved. Unless you are paying cash you should always start by getting approved for your loan. The loan approval will answer so many questions most first-time home buyers have. Plus you are prepared to actually shop and make offers on homes.
Most of the time the buyer’s agent doesn’t cost the buyer anything. Their commission is covered by the seller at closing. However if you purchase a home not listed with a realtor they may not be willing to compensate your realtor.
Trust your lender! Seriously, your lender has your best interest at heart. They may ask you all sorts of invasive questions, ask you for a bunch of documents, and have to occasionally share bad news with you. They are there to help you. If you feel like your lender isn’t there to help you you might consider working with someone who you can trust.
We have to. I know it’s super popular right now to buy a home in an instant like a rocket but those technologies have serious faults. If you go online and get “pre-approved” by a computer but you haven’t provided things like paystubs, w2’s, tax returns, and bank statements you aren’t really pre-approved.
There are so many rules and regulations in mortgage that it’s impossible to know if someone is approved for a loan without looking at those and other documents. Trust the lender who asks for them upfront and not in the middle of the process. IF you are working with a lender and haven’t provided these documents you could get denied after you go under contract. I promise that’s no fun.