Carlos Scarpero- Dayton and Cincinnati Ohio Mortgage Broker

VA mortgage loans allow Veterans to buy a home with no money down

Down Payment Required: None

Minimum Credit Score: None officially, but most lenders have their own minimum credit score

Other Requirements: Must be a Veteran

Frequently Asked Questions About VA Mortgage Loans

What is a VA mortgage loan?

A VA mortgage loan is a special mortgage program for Veterans to buy homes with zero money down. The VA does not issue the funds but provides insurance to protect the lender in case of foreclosure.

Who qualifies for VA mortgage loans?

Active duty military personnel qualify after 3 months if they get the loan while still on duty. If they get it after discharge, they need 2 years of service. Reservists and National Guard members need 6 years of service but this can be lowered if they were called up under Title 10. These requirements may be waived at the VA’s discretion if the Veteran was discharged due to a service related disability.

What are the credit score requirements for a VA loan?

There’s no official minimum credit score required for a VA mortgage loan. Each lender sets their own minimum. 

How does the VA view Chapter 7 bankruptcy?

A Chapter 7 bankruptcy needs to be discharged for at least 2 years to qualify for VA financing.

Can I get a VA loan with a Chapter 13 bankruptcy?

For a Chapter 13 bankruptcy, the repayment plan needs to have been paid for at least one year. If it’s not yet discharged, court approval will be needed.

Can I get a VA loan after a foreclosure?

VA allows you to have a foreclosure on your credit report as long as it’s been at least 2 years since the Sheriff filed the Sheriff’s Deed with the county recorder.

What are debt ratio limits on VA mortgage loans?

There’s no official debt ratio limit, but can be hard to get approved if the debt ratio is over 50%. VA also takes residual income into consideration as well. This is the income you have left over after all bills, including utilities and child card are paid. This is slightly different than the way other loan programs do this.

What is the minimum down payment required for a VA mortgage loan?

VA mortgage loans have no down payment!

How does VA view chargeoffs on my credit?

It is possible to get approved for VA financing with chargeoffs on your credit report. 

How are non medical collections handled on VA loans?

You will need a valid explanation for any non medical collection account. Depending on the circumstances, a payment plan may be needed.

How are medical collections viewed on VA loans?

Medical collections are ignored in debt ratio calculations and do not need to be paid off before closing.

How does VA view student loans?

Student loans have special rules when you are applying for VA financing.  If the student loan is on deferment and will be deferred for at least one year after the time of mortgage application, it can be ignored from debt ratio calculations. If it’s on a regular payment, then that payment amount is used. If it’s on Income Based Repayment (IBR), then the calculation for debt ratio purposes is 5% of the loan balance divided by 12.

Can I get a VA mortgage loan if I have mortgage lates on my credit?

You are allowed up to one mortgage late in the past 12 months with automated underwriting. You may be able to get approved with more on your credit but you will need manual underwriting and will need a good reason as to why it was late.

What is automated underwriting (AUS)?

When applying for a VA mortgage loan, mortgage lenders will either send the file to Desktop Underwriter (DU) or Loan Product Advisor (LPA). This program takes into account the credit score, the debt ratio and savings (called reserves in the lending industry) to make a yes or no credit decision. Sometimes if the file is close, we can also use manual underwriting to evaluate the file.

Is there a limit to how much I can borrow on VA?

The VA guarantee for no money down mortgage loans is capped at $453,100 in Ohio for 2018 and is higher in high cost markets. You can borrow over this limit but a down payment will be required. 

How are married couples treated on VA loans?

For married couples, you can use both incomes and get the VA loan with no money down.

How are unmarried couples treated on VA loans?

For an unmarried couple consisting of a Veteran buying a home with a non Veteran, if both incomes are used, a 12.5% down payment is required. If only the Veteran’s income is being used, then this rule does not apply and then home can be purchased with no money down. If both unmarried borrowers are Veterans than entitlement can be split and done as a zero down purchase.

What is the VA funding fee?

Instead of mortgage insurance, the VA charges a funding fee as part of the closing costs. This insures the lender in the case of a foreclosure. This fee varies based on whether the Veteran was in active duty or Reserves and the amount of money that’s being put down.  For first time homebuyers this fee ranges from 2.15-2.3% on a zero down purchase. This fee is waived if the Veteran has a service related disability.

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