When a person has served in the military and wants to buy a home, one of the first things to do is look for a VA home loan. This loan gives the buyer the opportunity to buy a home with no down payment. They may not be required to pay for mortgage insurance every month. There may be limitations on the closing costs paid by the buyer. And an appraisal detailing the value of a property could also be provided.
How much time is required?
Answering this question accurately can be difficult. Most VA loans can be closed within 45 days. This is common in the mortgage industry. There are a number of steps in the approval process and getting pre-approved is one way to shorten your closing time. Pre-approval means that a person has met the lender’s basic requirements for a loan before beginning the process. The timeline for a seller to move out of the home and a buyer to move into the home can affect closing time. An agreed move-in date can also make the process longer or shorter. The VA evaluation also plays a role. If the appraiser makes the loan based on necessary repairs, the closing date could be extended by weeks and sometimes even months. After an appraisal, the VA loan must go through the underwriting process. This is the final step. The need for more documentation or resolution of eligibility issues may cause the closing date to be extended.
How much income do I have to generate to get approved?
When a person applies for a VA home loan, they will learn of a formula known as the debt-to-income ratio (DTI). The DTI takes the VA loan applicant’s monthly debt payments and compares them to their gross monthly income. A lender will focus on monthly debts such as the cost of housing, unsecured debt, and more. The DTI index benchmark for a VA loan is approximately 41 percent. When it is more, a lender may want additional financial information. If a person has a high percentage of debt compared to their income, they should not give up. Some lenders will provide a VA loan with higher DTI rates.
How long do I have to be on active duty to get a VA loan?
The first step in applying for a VA loan is completing and submitting VA Form 26-1880. This is to request a Certificate of Eligibility. This certificate is provided by the Veterans Administration. It is proof that a person is eligible for a VA loan. It does not guarantee that a person will be approved for a loan. The time required on active duty is determined by when a person was in the military. A person who served in the Gulf War must have completed 24 months of continuous active duty or for at least 90 days and have received a discharge other than dishonorable. A person will qualify if they served during this time for less than 90 days but have a service-connected disability. For specific length of service requirements for a VA loan, contact the Veterans Administration.