Tag: va loan qualifications

VA Loans for Reservists and National Guard

As a Reservist or member of the National Guard, did you know that you could be eligible for a no down payment VA Loan? If you’re thinking about refinancing or buying a house, maybe you didn’t even realize the VA Loan could be an option for you. Although your role is different than that of a regular military member, you are still eligible to receive VA Loan benefits, with a few different qualifications. Here’s what you need to know.

VA Loan Requirements

The VA Loan was created to help veterans purchase homes, and the U.S. government provides a loan guaranty on it. It is a zero down-payment home loan with more flexibility and lower payments than conventional loans, which require 20% down. The VA Loan is only available to U.S. veterans and current military members — and that includes Reservists and National Guard.

VA Loan requirements for Reservists and National Guard are a bit stricter than those for regular military members. To be eligible for a VA Loan, you have to meet at least one of the following qualifications:

  • Six years in the Selective Reserve or National Guard, and you must have either been honorably discharged, retired, or transferred to the Standby Reserve or an element of the Ready Reserve
  • 90 days of active duty service during a wartime period
  • Discharged or released from active duty service for a service-related disability

VA Funding Fee

When you take out a VA Loan, you will have to pay a funding fee, which goes to the VA to help offset the cost of any loans that end up in default. If you have a service-related disability and are currently receiving disability compensation or are entitled to it, you would not have to pay the funding fee.

Related: Use our VA Loan Calculator to estimate total mortgage payments and VA guaranty fees!

The difference for Reservists and National Guard members is that the funding fee is slightly higher than it is for regular military members. If you take out a VA Loan with zero down, as a regular military member, you’d have to pay 2.15 percent for the first loan and 3.3 percent for any subsequent loans. As a Reservist or National Guard member, your funding fee would be 2.4 percent for the first loan and 3.3 percent for any subsequent loans.

If you have a 5-10 percent down payment, as a regular military member, you’d pay 1.5 percent funding fee for the first and any subsequent loan. With a 10-20 percent down payment, you’d have to pay a 1.25 percent funding fee for the first and any subsequent loan.

With a 5-10 percent down payment, as a Reservist or National Guard member, your funding fee would be 1.75 percent for the first and any subsequent loan. With a 10-20 percent down payment, your funding fee would be 1.5 percent for the first and any subsequent loan.

We, at Riverbank Finance, are grateful for our service members and would like to help you own the home of your dreams or refinance on your current home. To find out whether you are eligible for a VA Loan, contact one of our loan officers at (800) 555-2098 to schedule an appointment.

Request Information Now!

VA Loans Just Got Better

 

For eligible servicemembers, veterans, and surviving spouses, the existing VA home loan program just got better! The Department of Veterans Affairs (VA) has introduced a new policy regarding how student loan debt affects mortgage eligibility.

Related: VA Loans for Military Veterans

VA loosens Guidelines for Student Loans

The new policy makes it easier for VA eligible borrowers to obtain a purchase or refinance loan, by changing the way student loan monthly payments are calculated. Prior to this change, 1% of the total student loan debt had to be counted toward the borrower’s debt-to-income (DTI) ratio each month, regardless of actual monthly payment structure or deferment. Now, however, the payment will be calculated based on 5% of the total student loan debt, divided by 12 months. Clear as mud, right?

Lets do some math!

For example, lets say John has $65,000 in student loan debt. Formerly, his monthly student loan payment would have been $65,000 * 1% (.01) = $650. Now, his payment will be $65,000 * 5% (.05) / 12 = $271.

What if John is on an income-based repayment structure, and only pays $250 per month? The new policy also allows a statement from John’s student loan servicer to be provided, allowing the calculated payment to reflect the actual loan terms.

What if John’s student loans are in deferment? If his repayment is scheduled to begin within 12 months from the estimated closing date, we must use the 5% / 12 months rule. If not, however, the payment can be omitted altogether if written evidence can be provided that repayment will be deferred at least another 12 months from the closing date.

By changing the way student loan payments are calculated, more VA eligible borrowers will qualify, and for a larger amount. Check out our VA Mortgage Calculator to estimate your monthly payment on a desired home purchase.

What is a VA home loan?

VA home loans are originated by private lenders, banks, and mortgage companies, but the VA guarantees a portion of the loan, allowing us to offer you more favorable terms. VA purchase loans help you buy a home with a low interest rate, without requiring a down payment or private mortgage insurance (PMI). There are also special VA loan programs for Cashout and Streamline Refinances.

Who is eligible for a VA home loan?

Active servicemembers, veterans, and surviving spouses are eligible for VA home loan programs, with a valid certificate of eligibility (COE). Length of service or service commitment, duty status and character of service determine each veteran’s eligibility for specific benefits. All VA borrowers are still subject to the minimum credit score requirement of 580 and sufficient income levels to cover expected monthly obligations. For more specific information on eligibility and requirements, visit the VA benefits website.

For More Information Visit the VA Student Loan Announcement.

Get More Information

To apply for a VA Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

Request Information Now!

VA MORTGAGE LOAN INCOME GUIDELINES

VA loan income guidelines for buying a home with VA financing.When apply for a VA mortgage loan it is important to know the income guidelines to qualify for your home purchase. Most people already know the basics about no-down payment mortgage programs including the VA home loan, however it is important to understand how your income will be qualified as a military veteran.

VA loan income guidelines are similar to conventional mortgages and FHA loans however they add in one uncommon element called residual income. The residual income guideline can be a blessing and a curse for mortgage approval. Keep reading for details on how VA loan income is calculated.

VA Loan Income Qualification Example

The debt to income ratio (DTI) is calculated by dividing the monthly debt obligation by the gross monthly income. For example, we would start with calculating a borrower’s total Gross income (before taxes). A $24,000 per year salary divided by 12 months equals $2000 per month gross income (before taxes).

Next we would calculate the borrowers total debt obligations by adding their current monthly expenses. These expenses are those that report to the credit bureaus such as car loans, student loans, personal loans, credit cards and other mortgage payments. Let’s say for example these items total $200 per month. This is called the front end ratio.

Finally we add the expense of the new home being purchased to calculate the back end ratio or total debt to income (DTI). To be within the DTI guidelines for VA loans of 41%, the borrower could afford a house payment of $620/month including property taxes and home owners insurance. Here is the math:

  1. $24,000 Annual Income / 12 months = $2,000 Gross Monthly Income
  2. Total all currently monthly obligations to get the front end ratio ($200 for example)
  3. Calculate the total allowed housing expense ($2,000 x 41% = $820 total allow expenses)
  4. Subtract the current debts to find the total allowed housing expense ($820 – $200 = $620 per month allowed VA loan payment)

VA Loan Residual Income

When applying for a VA loan you will be asked several questions about all of your expenses including food, utilities and other loan payments. This is due to the fact the your loan officer is trying to help calculate your residual income which is the money left over after all bills are paid.  The residual income is unique to VA loan which may be part of the reason why VA loan preform so well with on time payments even compared with conventional mortgages and A-Paper mortgage programs. The residual income guidelines require different minimum amounts for different regions of the United States. The borrower must meet the minimum requirement for money left over after all expenses or the loan will not be approved.  Additionally the residual income guideline may help be a blessing as some lenders allow the standard DTI to be ignored if the residual income is at least 120% of the areas minimum residual income requirement.

Apply For A VA Loan

While VA loan rates remain low, it may be the perfect time to apply for a VA loan. If you’re a veteran or active member of the military, see what VA loans can do for you by calling the friendly, experts at Riverbank Finance today!

Request Information Now!

**NOTE: Riverbank Finance LLC is not a government organization nor affiliated with the Department of Veterans Affairs however they offer VA loan financing guaranteed through the Veterans Administration for current and prior military veterans.