Frequently Asked QuestionsWe are here to help answer any questions you have. Here are some questions we get often and easy to understand answers.
- VA Loans
Who is exempt from the VA Funding Fee?
Veterans with a service connected rating of at least 10%, active duty with a purple heart, and surviving spouses are generally considered exempt from the funding fee.
What DTI ratio maximum do you have?
The Debt to Income (DTI) Ratio required depends on the underwriting method. If the veteran’s file can achieve automated underwriting (AUS) approval then we do not have a maximum DTI ratio. If the veteran’s file cannot achieve AUS approval and needs to be manually underwritten, then we have a maximum DTI ratio of 65% consisting of the total household debts, plus the new proposed housing payment.
Can I use GI bill income to qualify?
Due to variability of GI bill income, the housing entitlement paid to the veterans using his or her GI bill cannot be used to qualify for a VA loan. The reason relates to how the veterans may not be paid if he or she were to fail a class. Losing this income due to failing a class could cause a cascading effect that could jeopardize the veteran’s ability to pay his or her mortgage.
Do I need to pay a VA Funding Fee if I put down a 20% down payment?
Yes! Assuming you aren’t exempt from the Funding Fee, due to service connected disabilities or any of the other reasons listed, you would still need to pay some of the Funding Fee. The Funding Fee is reduced to 1.4% if you put a 10% or more down payment towards your loan, but it never gets reduced to 0% no matter how much you put down.
What credit scores are required to use a VA loan?
The credit score needed for a VA loan depends on the lender you use. At Military Home Spot Lending, we follow the VA guidelines exactly as they are written and as such, we do not have a credit score requirement. The VA guidelines are written in such a way that they outline no specific number relating to credit scores. Instead, the VA focuses on your ability to make timely payments on your credit report in the previous 12 months and on time housing payments in the previous 24 months from the close date of the new loan. The VA defines this as “re-established credit”, which essentially means that the veteran is back on his or her feet after having gone through some credit problems in the past.
What are discount points?
Discount points are a one time fee that you can pay to buy your interest rate down below whatever the “par rate” may be for that day. “Par rate” is generally known as the rate that does not come with any discount points or lender credits, or as close “par” as possible. When considering discount points, be sure to calculate your recoup timeline by dividing the cost by the savings. This will help you determine if the discount points are worth the cost by alerting you to how long you’ll need to own the house before you break even.
What happens if I get assigned to another base within my first year living in a new home I just purchased?
The one year occupancy requirement for VA loans is waived for service members that get orders to move to another station.
What exceptions are there to the requirement that homeowners must live in the property for a full year if the home was purchased using a VA Loan?
There are a number of reasons why a veteran or service-member may not be able to meet the VA’s one year occupancy requirement after purchasing a home with a VA loan. Some of those reasons include a service-member getting orders to another duty station, large life changes like having a child or getting married, or hardship in the family or community that makes it no longer beneficial to live in that home for the entire 1st year.
What happens if my military contract ends within a year of me using my VA Loan benefit?
Your ETS or EAOS date (depending on branch) will be listed on your LES and your lender should take that into consideration when qualifying you for a VA loan. Generally, if you have a job lined up, or already know the income you are going to receive after your time in service, the underwriter and lender will use the lesser of the two incomes to qualify you for your VA loan. Such “other” incomes could be things like VA disability compensation, retirement income, or income listed on a job offer letter. If you intend to re-enlist prior to your ETS or EAOS date, be sure to alert your lender so that they can request the proper paperwork from you to support this.
What happens to my VA Loan eligibility if I am discharged from the military?
Assuming that you served the whole tour of your contract (or at least 2 years), nothing would happen to your VA Loan Eligibility. If you are discharged under conditions other than honorable, like an admin discharge or you are dishonorably discharged you will want to work with your lender to verify with the VA regional loan center that you are still eligible for a VA loan.
What is the lowest credit score Military Home Spot Lending accepts?
Can I get approved without a credit score?
A veteran or service member can get approved for a VA loan with no credit scores, but the rate will likely be much higher than those with a credit score, even if that credit score is bad. When considering approval for a veteran with no credit scores a lender will likely consider “alternate tradelines” like phone bills, utilities and housing payments to meet the VA “established credit” guideline.
What military income qualifies when calculating my DTI ratio?
Any military income that can be proven to continue for at least one year can be used to qualify for a VA loan. This includes Base Pay, BAS, BAH and any special duty pays that will continue for at least one year. If you are in area of higher cost of living, COLA can also be used to qualify.
If I want to rent out my current home, how does that affect my DTI and Residual Income?
The VA Loan is unique because it allows the borrower to offset the cost of their current mortgage if the lender can prove the rentability of the property. This is called “primary conversion” and is where a borrower is converting their primary residence to a rental property.
Can my residual income change if I live near a military base?
Yes! VA loans have a requirement that a veteran or service-member must have adequate residual income left over, after all bills are paid, to support a family or themselves. This requirement is lessened if the family has access to base which has lower costs of goods like groceries and other household products.
How long does underwriting take?
Your file will likely have to go in front of an underwriter a few times during the escrow process. Each time can take a couple of days, but the average time of escrow is generally around 30 days from accepted offer to your loan funding.
Are children of veterans eligible for the VA Loan?
Children of veterans, that aren’t veterans themselves, are not eligible for the VA loan. Unlike the GI Bill, the VA Loan can not be passed from parent to child, even if it was never used.
Do you need a pre-qualification?
A pre-qualification (not pre-approval) is not a necessary step for buying a house, but could be important to you as an individual because it’s a great way to determine roughly how much you could get approved for and to get your questions answered, without the credit impact of a full pre-approval.
What is more important? A pre-qualification or a pre-approval?
A pre-approval is more important than a pre-qualification in terms of the viability of buying a house, because a pre-approval is a more in-depth analysis of your financial profile and will give you a better understanding of your ability to buy a house.
How can I apply for my COE?
The best way to apply for a COE would be to speak with your lender and have them order it through the VA portal. Another good way to order the COE is by visiting your eBenefits account and requesting it there.
Can I make an offer on a house without a real estate agent?
Buying or selling a house without a real estate agent is certainly doable. However, we do not recommend it. The assurances and help you will get with a realtor by your side is something worth considering when buying or selling a house.
Do I need to include earnest money with an offer?
Although not required, earnest money also known as Good Faith Money, is a normal part of the home buying process. By putting down an earnest money deposit with your offer, you are showing the home seller that you mean business and are willing to put some of your own ‘skin in the game’.
If the seller rejects my offer, can I submit another one with a different price?
If a seller rejects your offer, it’s usually because they didn’t like the terms of the offer you submitted. You can definitely revise your offer and resubmit while they are considering offers.
Does the VA have any requirements on who can perform a home inspection?
Home Inspections are not required as part of the home buying process, but are highly recommended. You should choose a licensed inspector to perform your home inspection. The piece of mind you will receive from a home inspection done right is worth the costs associated.
Is there any way to expedite closing? Can I pick my closing date? (or who determines the closing date?)
The closing date of a home purchase is usually negotiated between buyer and seller during the offer phase. If both parties agree to close faster and your lender can accommodate that change, then it is possible to expedite the closing and close earlier than was originally planned.
Which refinancing option is the best if I want to shorten the length of my loan?
If you only want to shorten the length of your loan then a streamline refinance, IRRRL, or rate and term refinance is the best option.
Can I go from a Conventional Loan to a VA Loan?
You can definitely go from a Conventional loan to a VA loan. Even if you aren’t accessing the equity in your home, this is considered a cash out refinance. Speak with your lender about your options to determine if it makes sense to switch into a VA loan.
Why do I have to use a VA-approved appraiser?
VA approved appraisers are required on most VA loans. When ordering your appraisal, your lender will log into the VA portal and make a request for an appraisal. The VA will then assign a licensed and VA approved appraiser to your file.
What happens if the home I want to buy appraises low?
If the home you want to buy appraises low then you will likely need to come up with cash for the difference between the purchase price and the appraised value if you aren’t able to negotiate for the seller to lower the cost of the home.
Are there other types of interest besides fixed and adjustable?
Fixed and Adjustable rates are the only type of financing options available for a VA loan.
How much does my credit score affect my interest rate?
Your credit score affects your interest rate more than any other factor of your financial profile. The better your credit score is the lower your interest rate will be, typically.
How can I ensure the rate my lender gave me is the one I will get when I close?
The best way to ensure that you maintain the same interest rate the whole time you are buying your home is to lock the loan for a period of time equal to or greater than the negotiated escrow period.
How does APR affect my mortgage payments?
APR does not affect your mortgage payments. APR adjusts based on the overall costs of the loan and is a comparison tool used to help home buyers determine which lender is offering the better deal when both are offering the same interest rate.
What happens if I can’t make my mortgage payment?
If you can’t make your mortgage payments any longer, you should contact the VA regional loan center and contact your current loan servicer. They may be able to help you out with a variety of programs reserved for struggling homeowners.
Is there a way to waive my funding fee with the IRRRL refinance since I already paid it when I got my VA Loan?
Each loan is treated differently than the previous loan. The only way to get your funding fee waived is through service connected disability or any of the other reasons covered on our funding fee page here.
As a veteran, in order for my family go get a VA Loan, do I need to cosign? How does this work?
Anyone who cosigns on a VA loan with you would need to intend to occupy the home as well. Likewise, anyone who cosigns with you, that isn’t married to you or a veteran themselves, would likely need to put down a down payment. If it’s just you and the co-signer on the loan, they would need to come up with a 12.5% down payment.