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Jose Mitchell
Jose Mitchell

How To Use A Va Loan To Buy A House VERIFIED

The interest rate above shows the option of purchasing discount points to lower a loan's interest rate and monthly payment. One point amounts to 1% of the loan amount and is paid at closing. Points don't always have to be round numbers. Purchasing 1.5 points would cost $4,500 on a $300,000 mortgage.

how to use a va loan to buy a house

These rate offers are effective 04/01/2023 and subject to change. Rates displayed are the "as low as" rates for purchase loans and refinances. Rates are based on creditworthiness, loan-to-value (LTV), occupancy and loan purpose, so your rate and terms may differ. All loans subject to credit approval. Rates quoted require a loan origination fee of 1.00%, which may be waived for a 0.25% increase in the interest rate. Many of these programs carry discount points, which may impact your rate.

A VA loan of $300,000 for 15 years at 5.375% interest and 6.109% APR will have a monthly payment of $2,431. A VA loan of $300,000 for 30 years at 5.500% interest and 5.929% APR will have a monthly payment of $1,703. Taxes and insurance not included; therefore, the actual payment obligation will be greater. If you have less than your VA home loan entitlement, limitations to your loan amount may apply.

To qualify for a VA loan, you must meet certain income and credit requirements (similar to other loan programs) and have a valid Certificate of Eligibility (COE). While length of service, duty status, and conduct can also affect your eligibility for a VA loan, you may be able to obtain a COE if you belong to any of the categories below.

The views and statements expressed are deemed reliable as of the publish date indicated and may not be accurate or reliable at any future date. The views and statements provided are those of the author. Discussions regarding any financial information provided are not intended as individual recommendations and do not reflect the views or advice of Atlantic Bay Mortgage Group, L.L.C. The views expressed are subject to change at any time in response to changing circumstances in the market. Atlantic Bay Mortgage Group, L.L.C. disclaims any obligation to publicly update or revise any views expressed or information given. Loan programs may change at any time with or without notice. Information deemed reliable but not guaranteed. All loans subject to income verification, credit approval and property appraisal. Not a commitment to lend. Atlantic Bay Mortgage Group, L.L.C. NMLS #72043 ( is an Equal Housing Lender. Located at 600 Lynnhaven Parkway Suite 100 Virginia Beach, VA 23452.

VA loan programs help veterans and active duty service members to afford a home of their own. What many people are surprised to learn is that a VA loan may also be used to finance the purchase of a rental property, provided that certain guidelines are followed.

While there may be some hoops to jump through, the advantages of buying a rental property with a VA loan include no minimum credit score and a 0% down payment by working directly with the Veterans Administration instead of a conventional lender.

A borrower using a VA loan must occupy part of the property as a primary residence. For example, if a duplex (2-unit) property is being purchased, a borrower must live in one of the units as the main home.

VA direct and VA-backed loans may be used to purchase small multifamily properties with 2-4 units. A borrower would need to occupy one unit as a primary residence, but would be able to use the remaining units as rentals. Depending on the real estate market, multifamily (or multi-unit) properties may also be known as a duplex, triplex, or fourplex.

A VA loan can be used to purchase a single-family home as a primary residence that is partially used as a rental property. For example, a borrower may house hack by renting out a spare bedroom or turning the attic or basement into a studio apartment for rent. A single-family home with a detached apartment on the same lot may also be purchased using a VA loan.

To illustrate, assume that a 3-unit triplex has a history of generating rental income of $1,000 per month per unit. Remember that to qualify for a VA loan for the multifamily rental property, the borrower will need to live in one of the units as a primary residence. The rental income from the remaining 2 units will be $2,000 per month or $24,000 per year.

The possibility of being transferred to another state or even out of the country is a fact of life for active duty service members. Fortunately, borrowers who used a VA loan to purchase a rental property have several different options if they are transferred.

Active service members who use a VA loan to purchase a home can also keep the property and use it as a rental, even if the property is a single-family home. Hiring a local professional property management company to take care of the tenants and the property may be a good choice for service members who are transferred.

However, most VA-backed loans from conventional lenders require a borrower to occupy the home as a primary residence for at least one year before turning the property into a rental, so service member investors should check their mortgage note.

More than 21 million Veterans and Servicemembers live in the U.S. today, but only about 6 percent of them bought a home using a VA home loan in the past five years. That percentage could be much higher.

With a VA loan, you can buy immediately, rather than years of saving for a down payment. With a VA loan, you also avoid steep mortgage insurance fees. At 5 percent down, private mortgage insurance (PMI) costs $150 per month on a $250,000 home, according to PMI provider MGIC.

With a VA loan, this buyer could afford a home worth $30,000 more with the same monthly payment, simply be eliminating PMI. Using a VA loan saves you money upfront, and tremendously increases your buying power.

Eligible Veterans and Servicepersons can receive a one-time restoration when they pay off the VA loan, but keep the home. This scenario comes into play if you purchased the home long ago, and have paid off the loan. It also applies if you have refinanced the VA mortgage with a non-VA loan.

Once you have earned eligibility for the VA home loan, it never goes away. Those who served 20, 30, even 50 years ago often wonder whether they can still buy a home today if they never used their benefit. If eligibility can be established, the answer is yes.

According to loan software company Ellie Mae, VA loan rates are typically about 0.25% lower than those of conventional loans. The VA backs the mortgages, making them a lower risk for lenders. Those savings are passed on to Veterans.

Additionally, VA loans come with some of the lowest foreclosure rates of any loan type, further reducing risk for lenders. No surprise here, but Veterans and Servicepersons take homeownership seriously. These factors add up to lower rates and affordable payments for those who choose a VA loan.

The VA home loan is unlike most other VA benefits. This benefit is available from private companies, not the government itself. The Department of Veterans Affairs does not take applications, approve the loans, or issue funds. Private banks, credit unions, and mortgage companies do that.

Homeowners with a VA loan can use the Interest Rate Reduction Refinancing Loan, or IRRRL, to easily drop their rate and payment without an appraisal, or even paystubs, W2s or bank statements. The VA streamline refinance, as it is commonly known, gives VA loan holders a faster, cheaper way to access lower refinance rates when rates fall.

Shop around at various lenders, because each will have its own stance on past credit issues. However, VA guidelines do not state a minimum credit score to qualify. This gives lenders leniency to approve loans with lower scores. In addition, VA considers your credit re-established when you have established two years of clean credit following a foreclosure or bankruptcy.

The exception, though, is a foreclosure involving a VA home loan. In this case, you may need to pay back the amount owed on the foreclosed VA loan to regain eligibility. But for most home buyers with past credit issues, a VA home loan could be their ticket to homeownership.

VA typically charges a funding fee to defray the cost of the program and make home buying sustainable for future Veterans. The fee is between 0.50 percent and 3.3 percent of the loan amount, depending on service history and the loan type.

You can buy many types of properties with a VA loan, including a single-family (free-standing) home, a home of up to four units, and even manufactured homes. But condominiums are commonly overlooked by VA home buyers.

If you have any questions about VA loans and how you can get into a new home with VA benefits, feel free to talk to one of our sales agents. Visit to find a community near you and view our floor plans.

So we were able to approve the buyers with a primary residence, VA home loan! We were able to achieve this by thoroughly documenting the file and meeting the VA occupancy requirement. The Veteran and spouse were able to close on their new Myrtle Beach home.

How to buy a house in another state is possible! Foremost, keep in mind that if the scenario makes sense, can be verified, and we have an acceptable letter of explanation, we may be able to approve a VA loan where a borrower works a great distance from their work.

A VA loan may be one of the best deals in the mortgage industry. But despite benefits including no down payment, relaxed credit guidelines and less restrictive income requirements, there are disadvantages of a VA loan.

VA loans are only slightly more complicated than conventional mortgages, but just a couple of decades ago, VA loans were more restrictive. This was particularly true with respect to the condition of the property.

For example, if a VA borrower defaults on their mortgage, the VA will reimburse the lender for a certain percentage of the loan if the foreclosure sale of the property is insufficient to pay off the entire balance. 041b061a72


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