VA Home Loan Programs
The VA HOME LOAN PROGRAMS are designed to assist you, the VETERAN, in obtaining the goal of home ownership.
- VA offers NO DOWN PAYMENT home loans.
- VA interest rates are competitive with other types of loans.
- VA allows you to purchase MORE HOUSE WITH LESS INCOME than other types of loans.
- VA allows the assumption of your loan by another party that assists you in selling your home.
- VA allows you to refinance your VA loan to a lower rate with NO APPRAISAL, NO CREDIT CHECK, and NO INCOME QUALIFYING.
- VA allows you to take CASH OUT UP TO 100% OF THE CURRENT VALUE OF YOUR HOME.
- APPRECIATION in VALUE
- GREAT tax advantages
- FREEDOM from WASTED RENT, landlords, base housing
- PRIDE of OWNERSHIP in your HOME
THERE ARE THREE TYPES OF VA HOME LOANS
1. PURCHASE A VA HOME WITH NO MONEY DOWN.
You will be required to put down “EARNEST MONEY” when you write a purchase contract. This money will be returned to you at closing, and is usually used to pay closing costs. Closing costs will estimate around 3%-4% of your loan amount, or $5,250 on a $150,000 home. In addition to this, VA charges a VA FUNDING FEE that can be added to the loan and sales price. VETERANS WITH 10% DISABILITY or MORE DO NOT HAVE TO PAY THIS FEE.
There are several ways to handle these costs!
- You may pay them with your own funds.
- You may have the SELLER or BUILDER pay part or all of these costs for you.
- You may get a rebate from the REALTOR to pay a portion of the costs.
2. VA LOAN LIMITS
Legislation now allows the VA to use a locality-based approach in determining ceilings on its no-down payment home loans.
To see limits, visit: www.homeloans.va.gov/docs/2009_county_loan_limits.pdf. VA no-down payment loans are available for as high as $1,000,000 or more. If a large VA loan is needed, it may be obtained with a relatively small down payment.
3. EASY INCOME QUALIFYING
The VA uses two methods of income qualifying. The first is that your new house payment and other monthly obligations cannot
exceed 42% of your GROSS INCOME (not take home pay). A veteran making $3,400 per month, including allowances could afford a house payment of $1,428. If the veteran has a $220 car payment and a $50 credit card payment, these must be deducted.
Debt Free Payment $1,428
Less Car Payment -220
Less Credit Card Payment -50
House Payment you can afford $1,158
VA also uses a generous residual income approach that is more complicated. If you do not qualify by the 42% method, see a VA LOAN SPECIALIST to get the MAXIMUM AMOUNT YOU CAN BORROW. Veterans can borrow MORE with less income than non-veterans can.
The benefits of Veteran vs. Non-Veteran purchasing a $150,000 home
|A debt free Veteran must make $2,753
|A debt free Non-Veteran must make $4,128.|
|A Veteran buyer must put down $ 0.||FHA buyer must put down approximately $4,500. Home Conventional buyer must put down $7,500.|
|Veterans' have to add $250 in income, to make up $250 car payment.||Non-Veterans’ have to add $750 in income, to make up a $250 car payment!|
|Typical closing costs $2,077.||Typical closing costs $2,822.|
This series of articles on VA Home Loan Programs from the Money Book by Jeff Burch will continue on Thursday.