VA Home Loans
VA home loans can be an excellent financing option for eligible Veterans, active-duty service members, National Guard and Reserve members, and certain surviving spouses. At Abaca Mortgage, VA lending is a major part of what we do. We’re comfortable helping borrowers whether this is their first VA loan or they’ve used their benefit before.
VA financing can offer the possibility of buying a home with no down payment, no monthly private mortgage insurance, competitive interest rates, and no prepayment penalty. You don’t need to understand every VA rule before contacting us. Tell us what you’re trying to do, and we’ll help you figure out where to start.
Why Consider VA Home Loans?
For an eligible borrower, a VA-backed purchase loan can provide benefits that aren’t available with many other mortgage programs. Depending on the transaction, these can include no required down payment, no monthly PMI or MIP, competitive loan terms, and the ability to pay the loan off early without a prepayment penalty.
A VA loan is still a mortgage, so credit, income, debts, assets, property eligibility, occupancy, and lender requirements all matter. Our job is to look at the complete situation and help you understand how the VA program may work for you.
Who Is Eligible for a VA Loan?
Eligibility is based primarily on your military service history and duty status. Veterans, active-duty service members, qualifying National Guard and Reserve members, and certain surviving spouses may qualify for the VA home loan benefit.
The main document used to verify your eligibility is called a Certificate of Eligibility, or COE. If you don’t already have one, that’s okay. Our loan originators can help obtain your COE and review how much entitlement you currently have available.
Not sure whether you qualify? Call us before assuming you don’t. We can look at your situation and help determine the next step.
No Down Payment May Be Required
Many VA buyers are able to purchase a home without making a down payment. Whether that applies to your transaction depends on your available entitlement, the purchase price, the appraised value, and the details of the loan.
Even when a down payment isn’t required, you may choose to make one. We can compare the numbers with you. That way, you can see how different down-payment amounts could affect your loan, cash needed at closing, and VA funding fee.
VA Does Not Set a Minimum Credit Score
One of the biggest misconceptions about VA financing is that the VA requires a specific minimum credit score. The VA itself does not establish a universal minimum credit score for VA-backed home loans. Individual lenders can set their own credit requirements.
Many lenders prefer stronger credit profiles, but a score below 620 does not automatically mean you should give up on using your VA benefit. Because Abaca Mortgage works with multiple lenders, we can review your situation and see what options may be available. One lender’s guideline doesn’t necessarily apply everywhere.
Credit score is only one piece of the loan. Payment history, income, debts, assets, and the overall strength of the file can also matter.
Debt Ratios and Residual Income
VA underwriting looks at more than a single debt-to-income percentage. Your monthly debts are important, but VA loans also use residual income. This looks at how much income remains for normal living expenses after major monthly obligations.
Two borrowers with the same debt ratio may not get the same underwriting result. Household size, income, expenses, loan amount, and other factors can affect the analysis.
Certain expenses that borrowers may not normally think of as debt can also matter. For example, applicable job-related childcare expenses for young children can affect a VA loan review. This is another reason we like to ask detailed questions upfront.
What Can You Buy With a VA Loan?
VA purchase financing works with several types of residential property.
Eligible borrowers can finance many different property types. These include single-family homes, homes with up to four units, VA-approved condominiums, certain manufactured homes, and some new construction.
If you purchase a multi-unit property, you still need to meet VA occupancy requirements and use the property as your home. A VA purchase loan is not designed to buy a property strictly as an investment or vacation home.
If you aren’t sure whether a particular property will work with VA financing, send it to us. It’s much easier to investigate property eligibility before you’re deep into the transaction.
Buying a Condo With a VA Loan
You can use VA financing to purchase a condominium. However, the VA may need to approve the condo project.
This is especially important in areas with a large number of condos, including Destin, Navarre Beach, Pensacola, and other communities along the Northwest Florida coast.
When you’re considering a condo, let us know early. We can look into the project and determine what needs review before you get too far into the transaction.
A problem with one lender or one condo project doesn’t always mean there are no financing options. We’ll look at the situation and explain what may be possible.
Understanding the VA Funding Fee
Many VA borrowers pay a one-time VA funding fee. The amount can depend on the type of loan, whether you’ve used your VA benefit before, and the amount of your down payment.
Some borrowers are exempt from the funding fee. This can include certain Veterans receiving or eligible to receive VA compensation for a service-connected disability and certain qualifying surviving spouses.
When a funding fee applies, you can usually finance it into the VA loan. You don’t necessarily have to pay the entire fee in cash at closing.
We’ll review the applicable fee with you so you understand how it affects your loan.
What About Closing Costs?
A no-down-payment loan does not necessarily mean there will be no money needed at closing. Buyers can still have closing costs, prepaid expenses, insurance, taxes, and other transaction costs.
In some transactions, the seller can pay certain closing costs. Lender credits may also be available depending on the loan pricing you choose.
We can review the estimated costs with you before you move forward. Our goal is to avoid surprises and give you a better idea of what to expect.
You Can Use Your VA Benefit More Than Once
VA home loans are not necessarily a one-time benefit. Many eligible Veterans use VA financing multiple times throughout their lives.
If you previously had a VA loan and sold the property or paid off the loan, you may be able to restore your entitlement. There are also situations where someone still has an existing VA loan and has enough remaining entitlement to purchase another primary residence.
Don’t assume that having used a VA loan before means you can’t use one again. Let us pull your COE, look at your entitlement, and explain what your options may be.
VA Appraisals and Property Requirements
A VA purchase loan requires a VA appraisal. The appraiser estimates the property’s value and checks it against VA minimum property requirements.
A VA appraisal is not the same thing as a home inspection. A home inspection is a separate evaluation that can give you much more information about the condition of the home.
If the VA appraisal identifies an issue, it doesn’t automatically mean the purchase is over. We’ll explain what came up and help you understand what needs to happen next.
We Ask Questions Before Problems Become Problems
One thing we believe we do especially well is ask the right questions at the beginning of the process.
Are you changing jobs? Are you getting ready to separate from the military? Already carrying another VA loan? Receiving multiple types of income? Paying for childcare? Buying a condo? Self-employed?
Those details matter.
Sometimes a five-minute conversation can uncover an issue early. That gives us a chance to address it before we get deep into the loan process.
An initial conversation isn’t an approval, but finding potential issues early can save everyone time. It can also help prevent a major surprise after you’re already under contract.
We Keep Looking for Solutions
As a mortgage broker, Abaca Mortgage works with multiple lenders instead of being limited to only one lender’s loan programs and guidelines.
If a problem comes up, we want to understand why. Another lender or approach