How To Apply For a VA Home Loan

Get Your COE

Getting your COE is the quickest and most important step when applying for your VA Home Loan. The three main ways to get your COE are:

1. Through the VA eBenefits portal.
2. Talking to a loan officer and have a qualified mortgage lender take care of it for you.
3. By filling out and mailing in an VA Form 26-1880 (not recommended)

To learn more about your COE check out our “All about your COE” article.

Apply For Your Loan

Our two recommended ways to qualify and apply for a VA Home Loan:

1. You can apply through a qualified VA Home Loan vendor.
2. You can apply online through an online application portal.

Where Can I Use My VA Loan?

You can use your VA Home Loan Benefit to purchase a home anywhere in the United States, and its territories and possessions including Puerto Rico, Guam, Samoa, The Northern Mariana Islands and the Virgin Islands.

The Benefits of a VA Loan

No Down Payment Required

2020 brought some exciting changes to the VA Home Loan. The VA Home Loan now allows for zero down payment up to any loan amount, but some lenders do restrict the amount you can borrow with no money down. Currently The Veteran’s Mortgage Source has no restriction on the loan amount with no money down as long as you can qualify for it and you have a clear VA entitlement. If you have a portion of your VA entitlement used you will have to follow your VA County conforming limit and the necessary entitlement calculations to decide you max no down payment financing amount. Please consult with a loan officer if you currently have a portion of your entitlement used for your specific calculation to decide your available no down payment loan amount, or overall qualifying power on loan amounts with a down payment.

Flexible Underwriting

The VA Home Loan has very flexible underwriting compared to conventional and other types of home loan financing. Credit scores can go as low as 40 points lower than conventional loans, meaning you don’t have to have a perfect credit score to qualify for a loan. VA loans allow for a higher debt to income ratio than other types of home loan financing. In some areas this could mean borrower can qualify for tens of thousands more in a home than conventional financing.

No Closing Cost Options Available

There is usually a rate option that will allow for the lender to cover your closing costs. The only closing cost that a lender can not cover is the VA funding fee. If you are a disabled veteran, you may qualify to have the fee waived completely. You will have an option to pay points or fractions of a point to buy down your rate, pay zero points at a higher rate, or take a higher rate with rebate pricing that allows the lender to provide lender credits for closing cost credits.

No Monthly Mortgage Insurance

In low down payment situations, Conventional, FHA and USDA loans all typically require monthly mortgage insurance premiums. Mortgage Insurance does not help you as a borrower in anyway. It insures the lender against your default and you pay a monthly fee as basically an insurance payment.

For a conventional, you can get away from the Monthly Mortgage Insurance by either putting 20% down or coming up with a down payment and second mortgage combination. Here are a few differences between a conventional home loan and a VA Home Loan:

Conventional Vs. VA Home Loan

Conventional Home Loan Financing:

• 3% – 5% lowest down payment options
• No upfront funding fee
• Monthly mortgage insurance / typically to 20% down
• FInanced lender credits for closing costs but rate adjustment is generally worse than a VA Home Loan

VA Home Loan Financing:

• Zero down payment available
• Upfront funding fee may be financed (If you are a disabled veteran, you may qualify to have the fee waived completely)
• No monthly mortgage insurance
• Possible financed lender credits for closing costs and no high increase in interest rates

VA Home Loan Eligibility

Are You Eligible For a VA Home Loan?

If you fit into one or more of the following criteria you are eligible for a VA Home Loan:

• You are currently on active duty with 90 days of continuous service.
• You have served at least 181 active days during peacetime.
• Veterans who have served Post-Vietnam War with 181 days of continuous service. Veterans who served in WWII for 90 total days, Post-WWII for 18 continuous days, the Korean War for 90 total days, and Post-Vietnam War Veterans who served 181 continuous days.
• Veterans who served from 9/8/1980 to 8/1/1990 with a beginning date for officers of 10/17/1981 are eligible at 24 month of continued service or at least 181 days of ordered active duty service.
• Veterans who served from 8/2/1990 to present with 24 continuous months of service or at least 90 days of ordered active duty service.
• National Guard and Reserve members with six years of service in the Selected Reserve or National Guard with 90 days of active service. Completed all required training earning enough points. Must have been have been honorably discharged, or placed on the retired list.

Get your Certificate of Eligibility right now!

Other Eligible Beneficiaries

Individuals with service as members in certain organizations, such as Public Health Service officers and CDC, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with World War II service, and others.

VA Home Loan for Spouse of Service Member

The spouse of a Veteran can apply for home loan eligibility under one of the following conditions:

• You are currently married to an active service member who meets one or more of the conditions expressed above.
• You are the spouse of a military member who died in active duty and have not been re-married

Disabled Veterans and VA Home Loan Eligibility

Disabled veterans qualify using the same methods as non-disabled veterans. The differences in your home loan between a disabled and non-disabled service member are the disability benefits that are included on top of your standard VA Loan.

What is the 24 Month Rule?

As described above and, according to the Department of Veterans Affairs Benefits you are affected by the 24 month rule “If service was between Sept. 8, 1980, (Oct. 16, 1981, for officers) and Aug. 1, 1990. If so, Veterans must generally complete 24 months of continuous active duty service or the full period (at least 181 days) for which they were called or ordered to active duty, and be discharged under conditions other than dishonorable.”

To learn more about your eligibility contact a loan officer today.

The VA Funding Fee

What is the VA Funding Fee?

The VA Funding Fee is an insurance fund that the eligible borrower pays in their loan to ensure the prosperity and longevity of the loan program. It is a fee based on type of military service and first or subsequent use. It is charged both on purchase and refinance loans.

How Much is a VA Funding Fee?

The amount of the funding fee depends on:

• The type of transaction (refinance versus purchase)
• The amount of your down payment
• Whether this is the first use or subsequent use of the borrower’s VA loan benefit
• Whether you are/were regular military or Reserve or National Guard
• Veterans and active military buyers receiving compensation for a service-connected disability and deemed more than 10% disabled by the VA are exempt from paying the funding fee.

How Funding Fees Work

If you are VA refinancing you are required to pay a va funding fee, however, the fee can be applied to your loan payments. So if your fee is $30 a month it will be included in your monthly mortgage payments. Veterans that have a cash out refinance generally pay a slightly higher funding fee than the 0.5% fixed rate on the FHA streamline refinance.

VA Funding Fee Chart

You can use these funding fee charts to get an idea of what your funding fees might be depending on your branch of service and whether or not this is your first home loan.

New Home Funding Fee Rate
Down Payment	First-Time Use	Subsequent Use
0%	2.30%	3.60%
5 – 9.99%	1.65%	1.65%
10%+	1.40%	1.40%

 

Refinancing Funding Fee Rate
Down Payment	First-Time Use	Subsequent Use
n/a	2.15%	3.30%
n/a	2.40%	3.30%

The Amount of the funding fee depends on the following:

• The type of transaction (refinance versus purchase)
• Down payment
• Whether this is the first use or subsequent use of the borrowerʼs VA loan benefit
• Whether you are/were regular military or Reserve or National Guard
• Veterans and active military buyers receiving compensation for a service-connected disability and deemed more than 10% disabled by the VA are exempt from paying the Funding Fee, and new in 2020 active military purple heart recipients and also now exempt from paying the Funding Fee

VA Funding Fee and Disabled Veterans

Veterans and active military buyers receiving compensation for a service-connected disability and deemed more than 10% disabled by the VA are exempt from paying the funding fee. The VA funding fee can vary from 0.5% to 3.3% and having it waived can save you thousands of dollars in closing cost fees. To check if you are exempt, use your eBenefits portal and navigate to the disabilities page.

Talk to one of our loan specialists today about the potential funding fees associated with your loan as well as what your options are to reduce your fees.

What to Expect From VA Closing Costs

Even though no down payments are required for a VA Home Loan, there are still associated closing costs. Closing costs vary depending on the location of the property you are purchasing or the location of your lender and speaking with a loan officer in your area will help you acquire a good idea of the total potential costs.

Some fees can be taken care of by the seller so you don’t have to worry about them. The following fees can potentially be taken care of by the seller:

Fees Taken Care of by Seller

• 1% flat charge by the lender, plus reasonable discount points to lower the rate
• Appraisal and compliance inspections – including pest inspections, water well, septic, etc.
• Recording fees
• Credit report fee
• Prepaid items – includes prorations for property taxes, insurance, and initial escrow deposits as required by lender
• Insurance – the first years hazard insurance must be paid at closing, plus flood insurance if required
• VA flood certification – third party verification to determine if a property is located within a special flood hazard area
• Any survey fees associated with selling the home
• Title examination and insurance
• VA funding fee – unless exempt each veteran must pay a funding fee to VA. If you are a disabled veteran you can be exempt from the VA funding fee.

Fees Not Taken Care of by Seller

• Administrative fees
• Loan closing or settlement fees
• Document preparation fees
• Conveyance fees
• Attorney fees other than for title work
• Rate lock-in fees (fees associated with a rate guarantee for a given period of time)
• Escrow fees or charges
• Notary fees
• Underwriting fees
• Loan application or processing fees
• Broker fees
• Tax service fees

Funding Fees and Disabled Veterans

Veterans and active military buyers receiving compensation for a service-connected disability and deemed more than 10% disabled by the VA are exempt from paying the funding fee. The VA funding fee can vary from 0.5% to 3.3% and having it waived can save you thousands of dollars in closing cost fees. To check if you are exempt, use your eBenefits portal and navigate to the disabilities page.

To learn more about funding fees and see which ones apply to you contact a loan officer today.

VA Home Loan Refinancing

The Benefits of Refinancing With a VA Home Loan

VA mortgage loans have built in features allowing a loan to be refinanced to a lower interest rate without all of the criteria normally associated with a conventional loan. This is called an Interest Rate Reduction Refinance Loan (IRRRL); the veteran can secure a lower interest rate without any credit checks, appraisal, and income or asset verification and can roll the costs of the transaction into the loan so there are no out of pocket costs.

Types of VA Loan Refinancing

Cash Out Refinancing

Refinancing your VA mortgage to take equity out of your home and create a new loan program. This option is great if you are looking to re-invest the cash or use it for emergency purposes or pay off any outstanding debts.

Cash out refinancing allows you to enhance the quality of your home and life by helping pay for college expenses, unforscene medical costs, pay off high interest debt, or purchase a second home.

VA Interest Rate Reduction

Receiving a mortgage with a lower interest rate allows for more expendable monthly income that doesn’t need to be allocated towards your monthly mortgage payments. VA loans have some of the lowest interest rates available.

Do I Qualify for a VA Refinance?

The qualification for refinancing are similar to taking out your original loan. If you have been on duty for 90 days in wartime or 180 days in peacetime you can qualify for a VA refinance loan. If you want to know if you qualify reach out to one of our loan officers today.