The Department of Veterans Affairs enables approved lenders to offer mortgage loans to eligible military members and veterans for as little as no money down and with no monthly mortgage insurance. Active military, Veterans, Reservists and those who serve in the National Guard are eligible.
Required Down Payment. For an eligible veteran, no down payment would be required up tp the base loan amount. If the veteran has used the program before and did not sell and pay off the mortgage, the may be required to make a down payment to use the program a second time depending upon their amount of unused eligibility.
Required Cost. Though A does not require mortgage insurance, there is a 2.15% funding fee which can be financed into the loan amount. A higher fee is charges for a second time usage as well as Reservist and members of the National Guard. If the veteran is receiving service connected VA disability, they may be able to have the Funding Fee waived.
Closing Costs. VA allows sellers and lenders to pay for all closing cost with some restrictions. In addition, if not paid for by the lender or seller, the veteran may obtain a gift from a family member for all of the funds required.
Cash Reserves. VA requires no cash reserves; however, cash reserves are always recommended and may factor into approval process. If rental properties are owns by the veteran, reserves will be required
Refinances. VA allows cash-out up to 90% of the value of the property and rate reduction refinances up to 100% of the value of the property. If the veteran is refinancing a VA loan under the IRRRL program (no cash out), the funding fee is reduced to 0.5%.
Qualifications. VA uses a residual or “family budget” method of qualifying which can be more lenient than many conventional programs.
Restrictions. The greatest restriction is the limitation in eligibility. This means that a veteran cannot purchase with anyone except a spouse and use their income to qualify- unless that person is also a veteran with eligibility. Non- owner occupant co-borrowers are not allowed. The VA program is also limited to primary residences .