VA loans were designed to assist Veterans in buying a home or refinancing their mortgage on more affordable terms. Veterans who can show they have the repayment ability and decent credit history to purchase a home or to refinance an existing mortgage qualify for one of the most advantageous loan programs available to buy a home. Lincoln Savings Bank specializes in VA loan in Ames, Ankeny, Huxley, Des Moines and all through Iowa. Here are some of the benefits of a VA loan:
- VA programs generally look more favorably on prior credit problems as long as there is a good explanation and the issue is not likely to continue. Typically the homebuyer or home owner can have a lower credit score than a typical conventional buyer however underwriters like to see at least a 620 credit score. If there are extenuating circumstances and compensating factors an applicant can obtain a VA mortgage with less than a 620 credit score. The most important thing is that you’ve made payments on time for the prior 12 months. They look for a pattern of timely repayment. If you can show you’ve paid your utilities, cell phone or insurance every month that can help.
- There is no down payment required!
- Typically the family debt-to-income (DTI) can be higher than conventional and still be approved for a loan. The most important thing is that you can show ability to repay the loan. VA is the only loan program that allows the seller to pay down the debts of the Veteran to qualify. The seller can pay up to 4% of the value of the home towards the buyer’s debts. This could dramatically improve a Vet’s DTI. Ideally you could expect to pay about 1/3 of your gross income on housing costs and up to approx. 50% of your gross income on your total monthly obligations.
- There is no Mortgage Insurance required! The VA charges a one-time, upfront funding fee that typically allows for a lower interest rate on the loan. This can be rolled into the loan. In the case of a disabled vet or surviving spouse, the funding fee may be waived and the interest rate is still lower than typical financing.
- When refinancing VA will allow up to 100% of the value of the home when pulling cash out for home improvements or to consolidate debt.
- The appraisal will be completed by a VA certified appraiser.
In summary, a VA loan is an excellent way to honor our veterans for their service by helping them qualify for a great mortgage.