Common Mistakes Veterans Make When Applying for a Mortgage

Table Of Content

• Why might I want a VA-backed purchase loan?
• Credit score to buy a house FAQs
• Surviving spouse of a Veteran who died on active duty or who had a service-connected disability
• If you qualify for a VA-backed purchase loan, you can use the loan to:
• Types of VA Loans
• VA Loan Benefits
• What is a good credit score for buying a house?
• We can help with your questions about debt and other financial concerns

You typically need to sell a home to regain your full VA loan entitlement. The VA gives all qualified buyers one opportunity to repay a VA loan in full (usually with a non-VA refinance loan), keep the property and buy again with their full entitlement. Some lenders may not make all of these types of VA purchase loans. Understanding all of your mortgage options is key to making the best financial decision possible. Just because you’re a Veteran doesn’t mean a VA loan is automatically the right fit.

Why might I want a VA-backed purchase loan?

We also offer benefits and services to help you build, improve, or keep your current home. Find out how to apply for and manage the Veterans housing assistance benefits you’ve earned. Once you receive approval for a construction loan, the lender usually remains involved with the project and issues funds over the life of the construction loan. Known as an FHA 203(k) loan, this product is for home buyers or owners who need access to affordable financing for home renovations. The 203(k) loan insures purchase or refinance loans and the rehabilitation costs via a single mortgage. Though application process speed vary by lender and market conditions, the conventional time frame from application to closing ranges between 30 to 60 days.

Credit score to buy a house FAQs

Sellers in a VA transaction can pay all of a buyer's loan-related closing costs and up to 4 percent of the loan amount in concessions. There are also some costs and fees VA buyers are not allowed to pay. VA home loans offer competitive interest rates and terms and can be used to purchase a single-family home, condominium, multi-unit property, manufactured house or new construction. You’ll go through a private lender, like a bank or mortgage company, to get this loan.

Surviving spouse of a Veteran who died on active duty or who had a service-connected disability

Your lender is required by law to provide you a Closing Disclosure at least three business days before closing. Shop for a Home – A real estate agent can help you navigate the home buying process. It is important to select a real estate agent that you are comfortable working with, and that will work diligently to help you find the right home. Eligibility - Determine if you are eligible for the VA Home Loan benefit based on service and discharge requirements.

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Or, you might get stuck with a higher mortgage rate that leads to more expensive monthly payments. At this point, your lender should give you a better idea of what closing costs and fees to expect, such as title or loan fees. There are also specific non-allowable fees that VA borrowers cannot pay. Some buyers even ask sellers or lenders to cover some of these closing costs as a part of ongoing negotiations. When you're ready to start your VA loan preapproval, contact an approved VA home loan lender to begin the process.

Types of VA Loans

However, if a higher price leads to you making a small down payment, you may need to have a better score to compensate for that. It's important to point out lenders are free to set higher minimum credit score requirements than what the loan-backing organizations require. Some lenders may require a minimum score of 660 for conventional loans, or a score of 580 for a VA loan, for example.

To find great mortgage rates, start by using Credible’s secured website, which can show you current mortgage rates from multiple lenders without affecting your credit score. You can also use Credible’s mortgage calculator to estimate your monthly mortgage payments. When evaluating lenders, we also considered accessibility nationwide, customer ratings and the scope of the online application process. VA loans usually have no or low down payment requirements and lower interest rates than traditional mortgage products.

What is a good credit score for buying a house?

If the appraiser notes repairs are needed to meet the VA's Minimum Property Requirements, buyers can ask the seller to pay for those or even cover the costs themselves in some cases. Your loan team sends your contract and documentation to loan processors and underwriters who set out to verify the loan and the home work for the borrower, lender and the VA. Veterans United works to connect buyers with VA-savvy agents through Veterans United Realty, our national network of agents who understand the needs of military buyers. Answer a few questions below to speak with a specialist today about what your military service has earned you.

We can help with your questions about debt and other financial concerns

Contact your real estate agent and lender if there are any problems as soon as possible. Your loan team will likely have questions and requests for additional information while the appraisal process unfolds. The faster you get back to your lender with answers and information, the smoother this stage tends to go. Talk with your loan team if you have any questions or need an additional explanation about an underwriting request. The appraiser will look at recent comparable home sales when evaluating the home's fair market value.

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For an instant estimate of what you can afford to pay for a house, you can plug your income, down payment, home location, and other information into a home affordability calculator. If you're looking at your second VA loan (or a subsequent loan to that), your funding fee will be 3.3% with a down payment of less than 5%. Otherwise, you'll follow the fee schedule just listed -- 1.5% for a down payment of 5% or more, and 1.25% for a down payment of 10% or more. If you’re a current or former activated Reserve member, you’ll need a copy of your DD214 or other discharge documents. If you’re a current or former activated National Guard member, you’ll need a copy of your DD214 or other discharge documents. Your lender will review this document with you and answer any questions you may have so you are fully aware of what you owe and why.

To calculate your DTI ratio, divide your ongoing monthly debt payments by your monthly income. As a general rule, to qualify for a mortgage, your DTI ratio should not exceed 36% of your gross monthly income. However, if you apply for multiple mortgages within a two-week period, they'll generally be regarded as a single application for hard inquiry and credit scoring purposes. To put it another way, if you rate-shop quickly, you might have only one five- to 10-point hit to your credit score -- not five or six.

But it's possible to buy a house with a much lower score, particularly if you get an FHA loan, which allows scores down to 580 or even 500 with a large down payment. It's important to point out that your credit score isn't the only factor that lenders consider during the underwriting process. Even with a strong score, a lack of income or employment history or a high debt-to-income ratio could cause your mortgage approval to fall through.