VA Loans, does anyone have information, advice, experience with one?

[2b2rich]

I'm looking for your own personal experience with applying and being approved for a VA Loan?  I've read a lot that having a really high score isn't as crucial as the property needing to be prime for inspection.  Did you get a decent rate with a less than great score?  I have 2 auto loans and 3 bank cards, all within the past year, but all are blemish free tradelines.  I do have 2 SLs that are PIF but did have a few lates in the past that are due to drop off this coming March.  No other baddies.  (Debt-to-income ratio is 23%).

Thoughts, advice, suggestions?  Thanks in advance!

[phoenix_one]

From the limited information that you provide, you look good. What's your score?

First thing you need to do is shop for a loan and see for how much you can get preapproved.

With no baddies and low inq, Debt to Income  and total income will determine for how much you are going to get approved. Score will determine the rate you will get.

Once you get that out of the way, Now you start looking for a property. (Take in consideration property taxes if you are not applying for real estate exemption.)

 IF there are no issues with the property or the loan you can expect 2 months , from applying to closing.

You will now that the loan process is complete when you get that sweet message:

"Your loan is clear to close"

[2b2rich]

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@phoenix_one wrote:

From the limited information that you provide, you look good. What's your score? Fico is EQ 603 TU626 EX 600 (Mortgage model shows higher)

First thing you need to do is shop for a loan and see for how much you can get preapproved. My bank (AF Bank) does a lot of VA Loans and I guess I thought I would use them, but I should shop around, but make sure they do VA Loans?

With no baddies and low inq, Debt to Income  and total income will determine for how much you are going to get approved. Score will determine the rate you will get. I do have about 7 or 8 inquiries, but most were auto lenders and within a 2 week period (even if I did end up with 2 cars on my credit report, one of them is one I cosigned on)

Once you get that out of the way, Now you start looking for a property. (Take in consideration property taxes if you are not applying for real estate exemption.) In my state, I am exempt from $12K property tax because of my rating (100% P&T).  Is that what you're referring to?

 IF there are no issues with the property or the loan you can expect 2 months , from applying to closing.

You will now that the loan process is complete when you get that sweet message:

"Your loan is clear to close" 

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Thank you for the info.  I'm really excited about looking at property.  Income is a little over $52K a year, but my car is the only payment I have (I know that I have to include my son's car in my d2i ratio, and it is but those are the only two things.  I rent but they told me that isn't included in this because once I buy a home, I won't have rent.

[Anonymous]

I closed a VA loan last month, so here's what I can tell you from personal experience. The VA has no minimum score requirement; they only demand that the lender determine your overall credit worthiness. You need to find a lender that processes VA-guaranteed loans and then your must meet the lender's minimum score requirements, usually a minimum of 620-630 depending on lender (my lender's minimum was 640 for a VA loan, for example). The VA itself is not loaning you any money; all they do is guarantee the lender that the VA will pay them a certain amount of money if you default on your mortgage. My mid score was 786 and I closed with a rate of 3.25%.

It is true that the VA has minimum requirements for the condition of the property, but they aren't overly strict, in my opinion. The home must be habitable, with running water, utilities, decent roof, proper grading, sound foundation and floors, no wood rot, no pest infestation, no hazards. The property must be appraised by a VA appraiser and the appraisal must show that the property is valued at or above the loan amount. I ran into trouble there. My first deal fell through because the VA appraisal came in at less than the selling price and the seller refused to lower their asking price, so that broke the deal. My second deal fell through because problems were discovered in the foundation ($25,000 worth of problems) the seller refused to fix. I wouldn't worry too much about the VA's property condition requirements because honestly if a property fails to meet minimum VA requirements it's not a home you would want to buy or live in anyway (unless you're a flipper which is an automatic VA denial anyway).

If I were you I would spend my energy finding a lender in your area who does VA loans and who will work with your scores and give you a decent rate. Then I would worry about finding a property that meets VA conditions.

Good luck and I hope you find your dream home!

Marlena

[Anonymous]

Oh, one last thing. Yes, it's true that your rent is not figured into your current DTI. What will happen is that your new mortgage payment will be figured into your DTI and that final figure is the one that will be used to determine your new DTI and maximum loan amount. You LO should be able to tell you the max loan you'll qualify for based on the new mortgage added to your current DTI.

[2b2rich]

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@Anonymous wrote:

I closed a VA loan last month, so here's what I can tell you from personal experience. The VA has no minimum score requirement; they only demand that the lender determine your overall credit worthiness. You need to find a lender that processes VA-guaranteed loans and then your must meet the lender's minimum score requirements, usually a minimum of 620-630 depending on lender (my lender's minimum was 640 for a VA loan, for example). The VA itself is not loaning you any money; all they do is guarantee the lender that the VA will pay them a certain amount of money if you default on your mortgage. I understood this much, but not not exactly sure about the amount they guarantee.  I've had my COE for awhile now.   If I understand correctly, they only guarantee the downpayment amount?  For example, it's showing the basic entitlement is $35K, but that more is available in most cases for loans in excess of $144K.  In other words, does this mean that if I qualify for a home and the bank requires an amount of $30K downpayment, that I will not have to show it up front because the VA will guarantee that much should something happen they have to foreclose? My mid score was 786 and I closed with a rate of 3.25%.

It is true that the VA has minimum requirements for the condition of the property, but they aren't overly strict, in my opinion. The home must be habitable, with running water, utilities, decent roof, proper grading, sound foundation and floors, no wood rot, no pest infestation, no hazards. The property must be appraised by a VA appraiser and the appraisal must show that the property is valued at or above the loan amount. I ran into trouble there. My first deal fell through because the VA appraisal came in at less than the selling price and the seller refused to lower their asking price, so that broke the deal. My second deal fell through because problems were discovered in the foundation ($25,000 worth of problems) the seller refused to fix. I wouldn't worry too much about the VA's property condition requirements because honestly if a property fails to meet minimum VA requirements it's not a home you would want to buy or live in anyway (unless you're a flipper which is an automatic VA denial anyway).

If I were you I would spend my energy finding a lender in your area who does VA loans and who will work with your scores and give you a decent rate. Then I would worry about finding a property that meets VA conditions. This is EXACTLY what I'm thinking, sure is!  I've already been keeping up with all three burea reports and making sure everything is in order so that there are no surprises when I get ready to purchase.  This way, there should be nothing the lender tells me I need to do or pay before the purchase can proceed.  Still, I'm a little nervous because I've never bought a home on my own before.

Good luck and I hope you find your dream home! Thanks!!

Marlena

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@Anonymous wrote:

Oh, one last thing. Yes, it's true that your rent is not figured into your current DTI. What will happen is that your new mortgage payment will be figured into your DTI and that final figure is the one that will be used to determine your new DTI and maximum loan amount. You LO should be able to tell you the max loan you'll qualify for based on the new mortgage added to your current DTI. And here is the really important question I have.  This is where not making a downpayment could hold me back on some homes (if I understand correctly).  Let's say I find a home (hypothetically) for $200K.  If I put down a $40K downpayment, then the amount financed will be $180K and the payments would be X amount, but if I don't make a downpayment, even if the VA guaranteed the $40K, I will still be financing $200K and the payments obviously much higher which will give me a higher DTI for literally years to come.  Do I understand that right?

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 Thanks for all of your help (I've been down with a bug this weekend so wasn't on much, but I do appreciate these clarifications)!

[Anonymous]

Hi,

As my name would suggest, I was thoroughly confused by the whole credit process and scoring system here until I found these forums about 2 weeks ago. We just went through the VA process. This is what we were able to find out:

* If your certificate lists the $36K or $37K (I can't remember) that simply means that you're eligible for full benefits for loans up to the value of $417K.

* The VA guarantee is 20% of the value of the loan in lieu of a down payment required from you.

* Our lender required a minimum mid score of 620 for the VA benefits.

* The VA has a 2.15% funding fee for first time users. If you have a VA rating then it's waived. (We are opting to pay this in cash because we will request a refund once my DH receives his rating).

* We have to pay property taxes and insurance monthly along with our mortgage payments because our lender requires them to be held in escrow. If you're exempt in your state then you won't need to factor this in.

 We opted to go with a mortgage lender because my DH retired 6 weeks ago. He is on a sabbatical until August when his new job starts. No bank would touch us because of the lack of employment and DTI with only retirment pay for now. The mortgage lender, however, was more flexible and worked around our situation. The hardest part is waiting for the house to be built but we should be closing on June 30 provided the weather cooperates and no hurricanes come through SW Florida.

The process was really simple and quick and not as daunting as we imagined. You will probably suffer a multitude of paper cuts at some point but the end result will be worth it. HTH and best of luck.

[Anonymous]

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@2b2rich wrote:

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@Anonymous wrote:

I closed a VA loan last month, so here's what I can tell you from personal experience. The VA has no minimum score requirement; they only demand that the lender determine your overall credit worthiness. You need to find a lender that processes VA-guaranteed loans and then your must meet the lender's minimum score requirements, usually a minimum of 620-630 depending on lender (my lender's minimum was 640 for a VA loan, for example). The VA itself is not loaning you any money; all they do is guarantee the lender that the VA will pay them a certain amount of money if you default on your mortgage. I understood this much, but not not exactly sure about the amount they guarantee.  I've had my COE for awhile now.   If I understand correctly, they only guarantee the downpayment amount?  For example, it's showing the basic entitlement is $35K, but that more is available in most cases for loans in excess of $144K.  In other words, does this mean that if I qualify for a home and the bank requires an amount of $30K downpayment, that I will not have to show it up front because the VA will guarantee that much should something happen they have to foreclose? The VA guarantees 25% of your loan amount or up to $104,250. That means the max loan you can get through the VA program is $417,000; more in certain high cost of living areas. If you stay under $417,000 purchase price you do not need to make any downpayment at all. My mid score was 786 and I closed with a rate of 3.25%.

It is true that the VA has minimum requirements for the condition of the property, but they aren't overly strict, in my opinion. The home must be habitable, with running water, utilities, decent roof, proper grading, sound foundation and floors, no wood rot, no pest infestation, no hazards. The property must be appraised by a VA appraiser and the appraisal must show that the property is valued at or above the loan amount. I ran into trouble there. My first deal fell through because the VA appraisal came in at less than the selling price and the seller refused to lower their asking price, so that broke the deal. My second deal fell through because problems were discovered in the foundation ($25,000 worth of problems) the seller refused to fix. I wouldn't worry too much about the VA's property condition requirements because honestly if a property fails to meet minimum VA requirements it's not a home you would want to buy or live in anyway (unless you're a flipper which is an automatic VA denial anyway).

If I were you I would spend my energy finding a lender in your area who does VA loans and who will work with your scores and give you a decent rate. Then I would worry about finding a property that meets VA conditions. This is EXACTLY what I'm thinking, sure is!  I've already been keeping up with all three burea reports and making sure everything is in order so that there are no surprises when I get ready to purchase.  This way, there should be nothing the lender tells me I need to do or pay before the purchase can proceed.  Still, I'm a little nervous because I've never bought a home on my own before.

Good luck and I hope you find your dream home! Thanks!!

Marlena

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@Anonymous wrote:

Oh, one last thing. Yes, it's true that your rent is not figured into your current DTI. What will happen is that your new mortgage payment will be figured into your DTI and that final figure is the one that will be used to determine your new DTI and maximum loan amount. You LO should be able to tell you the max loan you'll qualify for based on the new mortgage added to your current DTI. And here is the really important question I have.  This is where not making a downpayment could hold me back on some homes (if I understand correctly).  Let's say I find a home (hypothetically) for $200K.  If I put down a $40K downpayment, then the amount financed will be $180K and the payments would be X amount, but if I don't make a downpayment, even if the VA guaranteed the $40K, I will still be financing $200K and the payments obviously much higher which will give me a higher DTI for literally years to come.  Do I understand that right? Whether or not you make a downpayment is up to you. If you want to lower your monthly payments you can make any kind of downpayment you want. Or none at all. If you have $40,000 as a downpayment, then yes your monthly payments and DTI will be lower. Another major benefit of the VA loan is that you don't have to pay PMI even with 0 downpayment. With conventional or FHA loans you have to pay PMI until your LTV ratio is 80% or more. For a $200,000 loan PMI would probably be about $100 per month or so (on top of your loan, interest, homeowners insurance and taxes) and you'd have to pay it every month until you pay your principal down to $160,000. Those of us who choose to use VA loans don't pay PMI at all so our mortgage payments start off lower right off the bat.

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 Thanks for all of your help (I've been down with a bug this weekend so wasn't on much, but I do appreciate these clarifications)! You're welcome.

Marlena

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[2b2rich]

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@WhiskeyTangoFoxtrot wrote:

Hi,

As my name would suggest, haha, I just put 2 and 2 together.  Thats all of us at some point or another in this journey! I was thoroughly confused by the whole credit process and scoring system here until I found these forums about 2 weeks ago. We just went through the VA process. This is what we were able to find out:

* If your certificate lists the $36K or $37K (I can't remember) that simply means that you're eligible for full benefits for loans up to the value of $417K. I just checked it and it does show $36K, so that makes sense.

* The VA guarantee is 20% of the value of the loan in lieu of a down payment required from you.

* Our lender required a minimum mid score of 620 for the VA benefits. Is this FICO 8 or one of the FICO Mortgage model scores? (I think I will be ok either way, but just curious)

* The VA has a 2.15% funding fee for first time users. If you have a VA rating then it's waived. (We are opting to pay this in cash because we will request a refund once my DH receives his rating). I hope it's soon and that his VARO doesn't have a very long backlog or processing average time.

* We have to pay property taxes and insurance monthly along with our mortgage payments because our lender requires them to be held in escrow. If you're exempt in your state then you won't need to factor this in. In my state, with my rating, I'm exempt from the first $12K so that's good to know also.

 We opted to go with a mortgage lender because my DH retired 6 weeks ago. He is on a sabbatical until August when his new job starts. No bank would touch us because of the lack of employment and DTI with only retirment pay for now. The mortgage lender, however, was more flexible and worked around our situation. The hardest part is waiting for the house to be built but we should be closing on June 30 provided the weather cooperates and no hurricanes come through SW Florida.

The process was really simple and quick and not as daunting as we imagined. You will probably suffer a multitude of paper cuts at some point but the end result will be worth it. HTH and best of luck.

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Thank you both again, for all of this info, it's clearing up a lot of the confusion for me and I appreciate it!

[Anonymous]

I just checked and they used the FICO 08 scores.