Everything you Must Know About VA Loans

Dated: August 29 2022

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Everything you Must Know About VA Loans

If you’re a veteran of the military, you may be eligible for VA financing. This 100% financing

program allows veterans to buy their dream home with no money down and the most flexible

underwriting guidelines out of any program.

So, what is the VA loan and how does it work?

Keep reading!

What is a VA Loan?

A VA loan is a loan backed by the Department of Veteran Affairs. It’s available to veterans who

served at least 181 days during peacetime (90 days during wartime) and who had an honorable

discharge.

The loan program provides 100% financing, so veterans don’t need a down payment on their

loans. It also has some of the most flexible guidelines including:

• No minimum credit score requirement

• Debt-to-income ratios up to 50%

• Proof of stable employment or employment offer to start in the next 6 months

• Proof of enough income to cover the daily cost of living

How Does a VA Loan Work?

VA loans are simple loans. You apply with a VA-approved lender, not the VA. In fact, you never

work directly with the VA. As long as you have proof of your entitlement (Certificate of

Entitlement), you’ll never deal with the VA.

Your lender will underwrite the loan and fund it if you’re approved. The VA’s role is to guarantee

the loan. This means if you default on the loan (don’t make your payments), the VA will pay the

lender back a portion of the funds. This is how lenders are able to offer flexible guidelines and

still provide 100% financing.

The VA Loan Funding Fee

The good news is that the VA doesn’t charge mortgage insurance. This means your mortgage

payment consists only of your principal, interest, real estate taxes, and homeowner’s insurance.

But there is a funding fee you must pay. Most borrowers pay 2.3% of the loan amount for the

first use of their benefits. If you reuse your VA loan benefits you might pay a higher fee. This is a

one-time fee though, that you pay at the closing.

If you can’t cover the cost, you may be able to wrap it into your loan amount or ask the seller to

cover it for you.

Are Spouses Eligible for VA Loans?

The VA treats veterans and their spouses as ‘one unit.’ So yes, spouses of veterans can be on the

VA loan. But there’s another exception.

If a veteran loses his/her life during their time in service, the surviving spouse can use their

benefits to get a VA loan as long as he/she remains unmarried.

Final Thoughts

VA loans are the most flexible and attractive loan option for veterans. If you served in the

military and would like to use your VA loan benefits, I can help guide you through the process.

Sellers don’t avoid VA loans like most people think any longer. VA loans today are a simple and

effective way to buy your dream home with the flexible financing you deserve for serving our

country

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Kevin Pedraza

Kevin has a natural propensity for customer service and intuitively knows what type of property his client is looking for, even if they haven’t eloquently described it. Kevin's ability to observ....

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