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Considering a Va Loan?

Here are a Few Things to Consider

What is a VA Loan?

A VA (Veterans Administration) guaranteed home loan is the preferred loan program for active, non-active, Reserve, National Guard, and retired military of the armed forces because there is no down payment needed and no private monthly mortgage insurance required. This is a great option for qualified borrowers looking to buy a home in Indiana.

VA mortgage loans can be used towards purchasing a home, building a home, or refinancing an existing mortgage.


We will discuss what role the VA plays in a VA guaranteed mortgage, the benefits of a VA home loan, who is eligible for a VA loan, and the documentation you will need to present to your lender in order to apply for a VA loan in Indiana.


Did you know that more than 27 million veterans and service personnel are eligible for VA financing, yet many aren’t aware it may be possible for them to buy homes again with VA financing using remaining or restored loan entitlement?


VA Does Not Offer Loans Directly & Does Not Guaranty You Will Qualify

The VA does not actually lend the money to you directly. They offer a guaranty to a lender that if you should default on the loan, they will pay the lender a percentage of the loan balance.


*The word GUARANTY does not actually guarantee the veteran will qualify for a VA home loan.

Primary Benefits of a VA Loan

  • 100% financing
  • No monthly private mortgage insurance is required
  • There is a limitation on buyers’ closing costs
  • The loan is assumable, subject to VA approval of the assumer’s credit
  • 30 year fixed loan
  • Seller can pay up to 4% of the veterans closing costs and even pay down they buyer’s debt to help lower their debt-to-income ratio
  • Interest rates are similar to FHA rates
  • You don’t need perfect credit

Frequently Asked Questions

  • My parent is a veteran. Can I obtain a VA loan if I have not served in the military myself?

    No, the VA loan benefit does not extend to a veteran’s children.

  • What is required to prove my record of military service?

    You will be required to us Standard Form 180, Request Pertaining to Military Records, to apply for proof of military service.

  • My spouse who has passed away was an eligible veteran. I am eligible for the home loan benefit myself?

    A surviving spouse is eligible if they have not remarried, and the eligible veteran died during active duty service or as a result of a service-related disability.

  • Is a VA loan better than a conventional mortgage?

    In many cases, yes. VA guaranteed loans often offer a lower interest rate than conventional mortgages, they do not require monthly private mortgage insurance when borrowing more than 80% of a home’s value, and they can be easier to get approved for.

  • How long does it take to close on a VA loan?

    It varies depending on the current workload of your lender, but it is typically the same as for conventional mortgages – 3 weeks to 45 days.

Who's Eligible?

Here is criteria for determining if you are eligible for a VA mortgage. Eligibility is the first step in determining if you can be approved for a VA loan. VA guaranteed loans are a great option to consider for qualifying borrowers looking to buy or refinance a home with little out of pocket expenses.

Military Status

  • Veterans with active duty service (who were not dishonorably discharged) during World War II and later periods are eligible for VA loan benefits.
  • World War II (September 16, 1940 to July 25, 1947)
  • Korean conflict (June 27, 1950 to January 31, 1955)
  • Vietnam era (August 5, 1964 to May 7, 1975) veterans must have at least 90 days of service.
  • Veterans and active duty military personnel who served during peacetime must have had more than 180 days of active service.
  • Veterans of enlisted service starting after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.

You May Be Eligible If Any One of the Following are True:

  • Served 181 days during peacetime (Active Duty)
  • Served 90 days during war time (Active Duty)
  • Served 6 years in the Reserves or National Guard
  • You are the spouse of a service member who was killed in the line of duty.


*For the most part, almost all active duty and honorably discharged service members are eligible for VA home financing.

Credit

The VA does not require that you have a certain credit score in order for approval. The actual mortgage lenders, however, are allowed to set their own standards for VA loan requirements. Changing economic conditions and increased losses due to loan defaults have motivated lenders to limit who they will lend to.



Since early 2010, most VA lenders in the U.S. have tightened their lending and credit score requirements, making home financing harder to come by for those with credit issues or other criteria that makes their loan more risky. As a result, getting a loan without a down payment is more difficult, though one of the few remaining options for 100% financing is a VA loan. Major lending groups have generally resolved to set the minimum credit score requirement at 640. To learn more about this, our article Credit Score Requirements For VA Mortgages is a great place to start.


Lastly, if you have either had a divorce, filed bankruptcy, or had a previous home go into foreclosure, you are not immediately disqualified from a VA loan, although there are some additional restrictions.

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Documentation

There are three specific pieces of documentation a lender will need to determine your eligibility:



  • A DD214 for discharged veterans.
  • A statement of service for active military personnel.
  • A certificate of eligibility (COE) to determine you have VA entitlement.


*Your VA lender can help you attain your certificate of eligibility on your behalf.

Get Pre-Qualified

Because each lender has different qualifying guidelines, the next step is to contact your lender to find out if you meet their VA loan requirements such as minimum FICO/credit scores, debt-to-income (DTI) ratios, and find out what your county’s maximum loan amount is.


You can apply online with our secure application and we will contact you to discuss your eligibility and home financing options.

Home Restrictions

With VA mortgage loans, you are allowed to take out a loan on either the purchase of an existing home or for the construction of a new home. However, VA mortgage loans are for primary residences only; you cannot purchase an investment property or second home with a VA loan as these property types are not eligible for VA financing.



After you have found a home or decided to have a new one built, you will need to have it approved for a VA loan through a VA-approved appraiser. A VA appraisal involves a thorough analysis of the home and property to determine what the current market of the home and property is.  This appraisal is especially geared towards reporting any defects involving safety or security of the home. This appraisal will be ordered by the mortgage lender during the approval process.

Appraisal Highlights

  • The appraiser needs to inspect both the inside and the outside of the house. If the house in question is being constructed, the appraiser still needs to analyze the property and construction site.
  • The official appraisal report will contain a list of "observable repairs that need to be completed."
  • This report will also contain a list of "customer preference items to be installed."
  • A few small issues with the property won’t immediately disqualify it, but a lot of small issues or a few big issues may

Loan Limits

  • The appraiser needs to inspect both the inside and the outside of the house. If the house in question is being constructed, the appraiser still needs to analyze the property and construction site.
  • The official appraisal report will contain a list of "observable repairs that need to be completed."
  • This report will also contain a list of "customer preference items to be installed."
  • A few small issues with the property won’t immediately disqualify it, but a lot of small issues or a few big issues may

VA Jumbo Loans

If the value of the home you want to purchase is greater than your county loan limit, don’t worry. You can get what is referred to as a “VA Jumbo Loan,” which will allow you to take out a VA loan on a home valued above the applicable county loan limit



VA Jumbo Loans, the VA mandates that the borrower pay 25% of the difference between the cost of the loan and the VA county loan limit.  At the same time, the VA would still guarantee 25% of the county loan limit.

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