What is a VA Loan?
A VA loan is a mortgage loan backed by the U.S. Veterans Administration. The loan doesn’t actually come from the VA, but the VA does guarantee a portion of it so lenders are able to offer borrowers better terms and rates.
You can use a VA loan to buy a single-family home, a manufactured home or a condo, or to build a home. In some cases, you can use a VA loan to buy and improve a home while you live in it, or use the benefit to make your existing home more energy-efficient.
Who’s Eligible for VA Loans?
Sometimes borrowers who have a difficult time getting financing qualify for VA loans.
If you’re an honorably discharged veteran of the U.S. Armed Forces or a qualifying dependent, you could be eligible for this type of financing.
Benefits of VA Loans
People who are eligible for VA loans are entitled to several benefits, including:
- Zero down payment, as long as the home’s sales price is equal to or lower than its approved value
- No private mortgage insurance requirements
- Limited closing costs, which can be paid by sellers
- No early repayment penalties
- Assistance, in some cases, if you can’t make your monthly mortgage payments
Maximum Loan Amounts
There’s no maximum loan amount when you borrow with a VA loan, but the VA does limit the amount it will guarantee. Your lender can give you guidance on the most current limits when you bring in the VA’s Certificate of Eligibility.
Maximum Debt-to-Income Ratio and Minimum Credit Scores
The VA doesn’t have a maximum debt-to-income ratio, but many lenders do. If you have a debt-to-income ratio that’s higher than 41 percent (and your lender is willing to accept that), your lender must provide “compensating factors” to the VA so you’re still eligible for the benefit.
There’s no minimum credit score to qualify for a VA loan benefit, either, although most lenders have minimum score requirements. However, despite the minimum score requirements, lenders must look at your entire loan profile to make a lending decision when they’re working with the VA. That enables many veterans and dependents who wouldn’t qualify for other types of financing to qualify for VA loans.
Are You Buying a Home in Angel Fire With a VA Loan?
We’d love to help you find the perfect home in Angel Fire using your VA loan benefit. When you’re ready to explore your options, call us at 575-377-1192 or get in touch with us online to tell us what you want from your next house. We’ll help you find it.