We offers a VA loan Tampa Bay. VA Loan is one of the most powerful mortgages in the housing market. It was created to help U.S. service members, veterans, and surviving spouses become homeowners. Read on to better understand loan options available for a military member and where to get help with the application.
Learn what a VA loan is and how you can use it.
Discover the benefits of a VA loan and who may benefit from it.
A VA home loan program is a mortgage guaranteed by the Department of Veterans Affairs (VA) and issued by private lenders. It was created back in 1944 with the main goal of helping returning service members own a home after World War II.
VA home loan program is only available for eligible active service members, veterans, and their surviving spouses. With the VA guaranteeing 25% of the loan, mortgage lenders feel safer offering favorable terms like 0% down payments to its VA home loan borrowers. However, the requirements needed to qualify for this type of mortgage are often strict.
From the U.S. Department of Veterans Affairs website, a VA home loans has many uses:
To build a house from start to end.
To purchase a house and improve its condition.
To buy a house, a manufactured house, or a lot, or a condominium in a project approved by VA.
To refinance an existing VA mortgage loan to get a lower interest rate.
To make improvements to your home's energy-related features.
Even though VA loans were created with military personnel in mind, that doesn't mean all service members are automatically eligible for the mortgage. To qualify for a VA loan, you need to meet at least one of the following:
If you were not able to complete the required length of service because you were discharged, you may still qualify for a VA loan, given that the reason for your discharge is any of the following reasons:
If you received an honorable, bad conduct, or dishonorable discharge, then you will not be eligible for a VA loan.
The VA loan program provides a lot of financial advantages that make it easier for those who are eligible to get into homebuying. Here are some of the benefits of a VA loan:
Probably the largest VA home loan benefit is allowing qualified borrowers to purchase a home without a down payment. This means that veterans, service members, and their spouses don't have to spend a long time saving up for the usual down payment amount.
There are other programs that offer low down payments, but the VA loan provides the benefit of no down payment. Typically, conventional loans would require a minimum down payment of 3% for first-time homebuyers. With an FHA loan, you would need a 3.5% down payment if your credit score is 580. But if it's between 500 and 579, then you would need to put a 10% down.
Most military members who've been away on duty might find it difficult to build their credit or save enough money for even a reduced down payment. Therefore, a VA loan's 0% down payment is a great help for them to purchase a house without having to spend much money upfront.
PMI or Private Mortgage Insurance is a coverage meant to protect lenders in case a borrower defaults on a home loan. PMI is required if a homebuyer puts less than 20% as a down payment.
On a conventional loan, private mortgage insurance typically costs between 0.5% to 1% of the loan balance per year. However, it automatically cancels once you reach 22% in home equity.
FHA home loans also has its own insurance called Mortgage Insurance Premium (MIP). It costs borrowers 1.75% of the loan amount upfront and another 0.45% to 1.05% annually. And unlike PMI, MIP lasts for the life of the loan.
Unlike these mortgages, VA loans don't require mortgage insurance even if you didn't put any money down at all. This allows borrowers to increase their buying power and save more money.
However, VA loan borrowers would have to pay upfront a funding fee which usually amounts to 2.3% of the loan amount. This fee is a one-time payment but you'll have a choice to roll it into your mortgage so you won't have to pay upfront.
Even though there are no down payments and PMI required, you would still have to pay out of pocket for the closing costs on a VA home loan. But unlike other home loan programs, VA loan's closing costs can be more affordable.
Other than the VA funding fee, borrowers are required to pay an origination fee which cannot be more than 1% of the loan amount. Lenders can also require the VA loan borrowers to pay for other third-party services as long as they are "reasonable and customary."
Additionally, some of the fees that you find in the closing costs for other home loans are not allowed in a VA home loan. This includes application fees, escrow fees, home inspections ordered by the lender, and more.
Homebuyers can also ask the sellers to cover most of the closing costs as long it doesn't exceed 4% of the loan amount. The sellers might not agree but VA borrowers are allowed to ask during the negotiation of the VA loan process.
VA loans are assumable. That means that you can transfer the terms of your VA home loan to another eligible borrower, even if they don't have the usual military qualifications.
If the new borrower is also an eligible VA borrower, you can save your VA loan entitlement by having them sign a Substitution of Entitlement. If they are civilians, then they would have to meet the qualifications required by the lender.
Although you can explore interest rates from other loan types, there is nothing compared to a VA loan's rate. A VA loan's interest rate is typically 0.5% to 1% lower. Having a lower interest rate not only helps borrowers save money but also means that more of their monthly payments are going into paying off the principal amount.
The VA does not enforce a minimum credit score. However, most lenders would want to see a credit score of 620, while some would accept a score of 580.
VA home loan program were created to benefit veterans, active military personnel, and military families.
If you don't have these requirements on your resume, there is still a chance for you to qualify. It's always worth talking with one of our mortgage loan brokers so we can provide you with solutions regarding your specific situation.
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Your lenders will request your military documents to confirm your VA Loan eligibility in Tampa. There are different documents that you might need to show depending on your branch and duration of service. Here are the most common ones:
A Certificate of Eligibility (COE) is the most important military document you'll need for a VA home loan. Without it, you'll be denied a VA mortgage even if you're an active service member. As the name implies, a COE is a document from the Department of Veterans Affairs that verifies your eligibility. It will also show your applicable VA loan entitlement and if you need to pay a funding fee.
NGB Form 22 is also known as the National Guard Report of Separation and Record Service. The main purpose of NGB Form 22 is to prove if you are eligible for the VA benefits. This is because the NGB Form 22 includes your Character of Service, which shows if you've been honorably discharged or not. Additionally, it also shows if you served the required time to qualify for a VA loan.
Another document that a member of the National Guard should have is the NGB Form 23 or the Retirement Points Summary Statement. If the NGB Form 22 shows your character of service, the NGB Form 23 verifies the time you've spent on active duty. It shows the years you've spent in service, retirement points, and your estimated retirement pay.
DD 214, also known as DD Form 214, Certificate of Release or Discharge from Active Duty, is used as proof of military service. It's issued to U.S. military personnel upon retirement, separation, or discharge from service.
If COE confirms your VA eligibility, a Statement of Service letter is often used as income verification. The letter usually includes your rank, date of active duty, current deployment, and any details on military-related sources of income. A Statement of Service is a supplement to COE and not an alternative.
The CG 4174 or 4175 is for the Coast Guard reserves. Also known as the Reserve Retirement Points Statement, this document will verify if a member of the U.S. Coast Guard has accomplished the required 6 years of service to qualify for a VA loan.
The DARP Form FM 249-2 or ARPC Form 606-E is also known as the Chronological Statement of Retirement Points. This document is for the Army Reserves to prove that they have completed their 6 years of service.
NRPC 1070-124 also known as Annual Retirement Point Record, is used as proof that a Navy Reserve has enough years of service.
Also known as the Reserve Retirement Credit Report, the NA VMC HQ509 or NA VMC 798 is for members of the Marine Corps Reserve to show if they have completed the required years of service.
For the Air Force reserves, you'll need to submit the AF 526 or Point of Summary Sheet. This will show evidence of your 6 years of service and if you were discharged honorably.
Even though the benefits of a VA mortgage are great, the qualification requirements are stricter than other programs. If you want to qualify for a VA loan in Tampa FL, you or your spouse must have:
Eligibility also extends to spouses of service members who died during active duty, are listed as POW/MIA for at least 90 days, or who died or as the result of a military-related disability.
If you don't have these requirements on your resume, there is still a chance for you to qualify. It's always worth a conversation with one of our mortgage loan brokers for a look at your specific situation as you consider buying a home.
As with other home loan programs, a mortgage pre approval is also important when applying for a VA home loan.
A preapproval will show you an estimation of the amount a lender is willing to give you. With it, you'll have a clearer idea of how much house you can afford.
Most home sellers nowadays require buyers to provide a preapproval letter before accepting a purchase offer. So getting pre approved means that you are a serious buyer.
Other than the necessary military documents, your lender might require you to provide other documents to get pre approved including:
Once you've been preapproved, you can then start shopping for a home.
A VA loan can be used for new builds, single-family homes, or condos as long as they serve as your primary residence. You can use a VA loan to purchase a multi-unit property, given that you'll be living in one of those units.
Working with a reputable real estate agent can make this step a lot easier. They know the housing market well and can help you find a property that suits your needs.
Once you've chosen a home, you can then start to build a strong offer.
Determine how much you should offer depending on certain factors such as your financial situation, the condition of the property, and the competition. You should also decide on the contingencies such as earnest money, appraisals, or inspection.
Even though a home inspection is not required in a VA loan, getting it done might help you save money in the long run. You might get to discover problems that cannot be seen by the untrained eye.
Additionally, you have to remember that the closing costs for a VA loan Tampa FL are different from other home loans. For example, with a VA loan, you can ask the seller to cover some of the closing costs as long as it doesn't exceed 4% of the loan amount.
If the seller accepts your offer, then a purchase agreement can then be made. But keep in mind that every instance is different. Some sellers will readily accept the first offer, others will need more negotiations, and some will outright reject it.
In this step, you'll submit your purchase agreement and other documentation to the underwriter. The main role of an underwriter is to verify your income, assets, VA loan Tampa eligibility, and other necessary details. They will then determine whether you are financially worthy of loan approval.
The underwriter would also order a VA appraisal. The Department of Veterans Affairs would assign an independent third-party appraiser that will assess the value of your chosen home.
While the appraisal is being done, the underwriter might ask you some questions or request additional information. Respond to these concerns as soon as you can to have a smoother VA home loan process. If the underwriter is satisfied with your loan file, you'll then be moved to a "clear to close" status.
Before the scheduled closing day, your lender will give you a Closing Disclosure. A Closing Disclosure is a 5-page document that contains details about your VA loan Tampa. This includes your terms, monthly payments, and closing costs. Read through this document and make sure that you understand everything.
You'll also get a final walk-through of the property before signing the closing papers. This is to ensure that they are no damages since your previous visits.
And on closing day, be prepared to sign a lot of paperwork. But once everything has been reviewed and all parties are satisfied, the ownership will then be officially transferred from the seller to the borrower.
Buying a home is a long, complicated process that usually comes with terms and concepts you don't use regularly. To help you with this, we have created a list of questions that VA loan Tampa clients usually ask us.
If you have a full VA entitlement, you won't have a limit on how much you can borrow. However, the lender will still be the one to decide on how much home loan they would give you based on your creditworthiness.
You'll have full VA entitlement if:
If you don't have a full VA entitlement, then you will be subject to loan limits. As of 2022, the VA loan limit is $647,200 in most U.S. counties and $970,800 in high-cost counties.
When you apply for a VA loan with zero down payment, there are closing costs associated with obtaining the loan. The seller can contribute up to 4% towards your closing cost. We also offer no closing cost options.
The best credit score required can be as low as 620. However, most mortgage lenders will require a minimum of a 640 credit score for a VA loan. Additionally, they would like to see 1-3 positive tradelines, such as credit card reporting for the past 12 months.
A bankruptcy won't disqualify you from getting a VA loan. However, you might have to wait for two years from filing bankruptcy to applying for a VA home loan. And within those two years, you would have to improve your financial standing.
The Department of Veterans Affairs might have some exceptions allowing military members to be eligible before the two-year mark. But keep in mind that the ones who will issue the mortgage are the lenders. That means they'll have the final say as to how long you'll have to wait.
The maximum debt-to-income ratio for a VA home loan is 41%. This means that your total monthly debt, which includes your mortgage payments, should not go beyond 41% of your pre-tax income.
VA home loan allows a co-borrower even if they don't meet the program's military service requirement.