Kentucky VA Mortgage Loans
What are VA Home Loans?
VA Loans provide military veterans and current service members a distinct advantage when it comes time to purchase or refinance a home. Today's VA Loans have the most favorable terms available for most veterans. VA Loans can be used to purchase a new home with no down payment with no mortgage insurance or refinance up to 90% of homes current equity.
What are the eligibility requirements for a VA Loan in Kentucky?
Veterans Affairs loan guidelines use two methods of income qualification in Kentucky. The residual income method is the primary method, where it is determined that the borrower has sufficient income to cover daily living costs once housing, taxes, insurance and all other liabilities like credit card and auto payments have been made. Additionally, VA loans use a debt to income ratio (DTI). Using this ratio, the veteran's total debt should not exceed 41% of the veteran's total income. Most lenders will require at least a 580 to 620 credit score for a VA Loan approval. Keep in mind, VA guidelines do not call for a credit score but most lenders institute minimum credit score overlay to protect from buybacks from VA loans if they have too many go into foreclosure
How much can I borrow?
The maximum Kentucky VA Mortgage amount is determined by:
Maximum VA Loan in Kentucky: The largest loan allowed for VA mortgages with zero down is now based on your VA loan entitlement in KY. Please refer to the Kentucky VA Loan Limit chart at the bottom of this page to see your area's limit.
Maximum Finance: For purchase transactions, the Maximum VA Loan will be 100% of the lower of the selling price or the appraised value.
What will the down payment and closing costs be?
no down payment required and closing costs vary from lender to lender and usually is based upon the loan amount, credit score, time to close (lock period) and whether or not you get a par rate or a higher rate with a lender credit to pay some of your closing costs at closing.
What property types are allowed for VA Loans in Kentucky?
VA Loans may be used to purchase or refinance single-family residences and VA approved condo projects if the property is the veteran's primary residence.
Can I do a VA refinance in Kentucky?
Three kinds of VA Refinance programs are available for veterans in Kentucky.
Rate/Term VA Refinance
The Rate/Term VA Refinance can be used to refinance a conventional, FHA or subprime mortgage into a stable, fixed rate VA Loan.
VA Cash-Out Refinance
A Cash-Out VA Refinance is very beneficial for the veteran who wants to access the equity that they have built up in their home. VA Loans can be used to refinance up to 90% of a homes current value and take cash out for any reason.
Streamline Refinance
The VA Streamline Refinance is designed to lower the interest rate on a current VA mortgage or convert a current VA adjustable rate mortgage into a fixed rate. A VA Streamline Refinance Loan can be performed quickly and easily. It requires much less hassle and paperwork than a normal refinance including no appraisal, no qualifying debt ratios and no income verification.
How much can I refinance in Kentucky?
The maximum amount for an KY VA loan is determined by:
Maximum VA Loan in Kentucky: The largest loan allowed for a VA Mortgage varies from county to county. To see what the limit is in the county in which you're interested, visit the following page
This site lists U.S. territories as well as states.
Maximum Finance: In Kentucky, The maximum VA refinance loan amount will be 100% of the appraised value of the home for a rate/term refinance or 100% of the appraised value for a VA cash out refinance.
What factors determine if I am eligible for a VA Refinance Loan?
VA refinance loans use two methods for income qualification purposes in Kentucky. The residual income method is the primary method, where it is determined that the borrower has sufficient income to cover daily living costs once housing, taxes, insurance and all other liabilities like credit card and auto payments have been made. Additionally, VA loans use a debt to income ratio (DTI). Using this ratio, the veteran's total debt should not exceed 41% of the veteran's total income. Most lenders will require at least a 620 credit score for a VA Loan approval.
Why choose a VA Home Loan?
Kentucky VA Mortgages require no down payment.
There are no prepayment penalties for VA Home Loans.
An Kentucky VA Loan is fully assumable, provided the person assuming is qualified.
VA Mortgage Loans have no PMI premiums.
A VA Mortgage Loan is eligible for non-credit qualifying, Streamline Refinance or "IRRRL".
A VA Home Mortgage is available all areas of the country, provided a market exists for the property and the home meets VA's property standards.
A VA Home Loan may be used to purchase or refinance a new or existing home.
Kentucky VA Loans are offered at terms of 15 or 30 years.
If the borrower wishes to take cash out of the property, then the maximum financing amount is 90% of the appraised value, depending on the borrowers qualifications. If the borrower does not take cash out then the maximum financing will be 100% of the appraised value of the home or the amount you are refinancing plus closing costs, whichever is lower.
Kentucky VA refinance mortgages do not come with prepayment penalties, have no teaser rates nor balloon payments. They are offered at market rate with terms up to 30 years and are fully amortized, meaning that you pay towards principal and interest every month.
If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new VA mortgage, then you should ask your current lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. Offering either of these options is at the discretion of the lender.
Not to Kentucky VA, but the current mortgage lender considering the refinance would have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home’s value.
Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.
Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.
The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make an application for the home loan benefit as a surviving spouse, please contact us.
The Department of Veterans Affairs’ (VA) Home Loan benefit may be used to purchase a farm.
Maximum Finance: In Kentucky, The maximum VA refinance loan amount will be 100% of the appraised value of the home for a rate/term refinance or 100% of the appraised value for a VA cash out refinance.
What factors determine if I am eligible for a VA Refinance Loan?
VA refinance loans use two methods for income qualification purposes in Kentucky. The residual income method is the primary method, where it is determined that the borrower has sufficient income to cover daily living costs once housing, taxes, insurance and all other liabilities like credit card and auto payments have been made. Additionally, VA loans use a debt to income ratio (DTI). Using this ratio, the veteran's total debt should not exceed 41% of the veteran's total income. Most lenders will require at least a 620 credit score for a VA Loan approval.
Why choose a VA Home Loan?
Kentucky VA Mortgages require no down payment.
There are no prepayment penalties for VA Home Loans.
An Kentucky VA Loan is fully assumable, provided the person assuming is qualified.
VA Mortgage Loans have no PMI premiums.
A VA Mortgage Loan is eligible for non-credit qualifying, Streamline Refinance or "IRRRL".
A VA Home Mortgage is available all areas of the country, provided a market exists for the property and the home meets VA's property standards.
A VA Home Loan may be used to purchase or refinance a new or existing home.
Kentucky VA Loans are offered at terms of 15 or 30 years.
VA Refinance Questions Answers
1. What are the guidelines for a Kentucky VA Refinance?
If the borrower wishes to take cash out of the property, then the maximum financing amount is 90% of the appraised value, depending on the borrowers qualifications. If the borrower does not take cash out then the maximum financing will be 100% of the appraised value of the home or the amount you are refinancing plus closing costs, whichever is lower.
2. Why should I consider refinancing into a Kentucky VA-insured mortgage?
Kentucky VA refinance mortgages do not come with prepayment penalties, have no teaser rates nor balloon payments. They are offered at market rate with terms up to 30 years and are fully amortized, meaning that you pay towards principal and interest every month.
3. What if I have a prepayment penalty and other refinancing costs and there isn’t enough equity in my home to refinance?
If you do not have sufficient equity in your home to add your prepayment penalty and/or other refinancing costs into your new VA mortgage, then you should ask your current lender to consider a second mortgage to pay the difference or a short payoff on your existing loan. Offering either of these options is at the discretion of the lender.
4. Does it matter that the value of my home is now less than what I still owe?
Not to Kentucky VA, but the current mortgage lender considering the refinance would have to be willing to accept a short payoff on the existing loan OR to hold a second mortgage to make up the difference needed to pay off the existing mortgage and the home’s value.
5. I have already obtained one Kentucky VA loan. Can I get another one?
Yes, your eligibility is reusable depending on the circumstances. Normally, if you have paid off your prior VA loan and disposed of the property, you can have your used eligibility restored for additional use. Also, on a one-time only basis, you may have your eligibility restored if your prior VA loan has been paid in full but you still own the property.
6. Only a portion of my eligibility is available at this time because my prior loan has not been paid in full even though I don’t own the property anymore. Can I still obtain a VA guaranteed home loan?
Yes, depending on the circumstances. If a veteran has already used a portion of his or her eligibility and the used portion cannot yet be restored, any partial remaining eligibility would be available for use. The veteran would have to discuss with a lender whether the remaining balance would be sufficient for the loan amount sought and whether any down payment would be required.
7. Is the surviving spouse of a deceased veteran eligible for the home loan benefit?
The unmarried surviving spouse of a veteran who died on active duty or as the result of a service-connected disability is eligible for the home loan benefit. If you wish to make an application for the home loan benefit as a surviving spouse, please contact us.
Be aware that the lender charges interest, in addition to closing fees and charges. Here are some general rules:
- The lender, not VA, sets the interest rate, discount points, and closing costs. These rates may vary from lender to lender
- Closing costs such as the VA appraisal, credit report, state and local taxes, and recording fees may be paid by the purchaser, the seller, or shared
- The seller can pay for some closing costs. (Under our rules, a seller's "concessions" can't exceed 4% of the loan. But only some types of costs fall under this 4% rule. Examples are: payment of pre-paid closing costs, VA funding fee, payoff of credit balances or judgments for the Veteran, and funds for temporary "buydowns." Payment of discount points is not subject to the 4% limit.)
- You are not allowed to pay for the termite report, unless the loan is a refinance. That fee is usually paid by the seller.
- No commissions, brokerage fees, or "buyer broker" fees may be charged to the Veteran buyer
Adding the VA Funding Fee and other loans costs to your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be. Also, you could have difficulty selling the house for enough to pay off your loan balance.
Farm Loans: Kentucky VA Home Loans Overview
The Department of Veterans Affairs’ (VA) Home Loan benefit may be used to purchase a farm.
There must be a farm residence on the land, and the Veteran must live in it as his or her primary residence. VA-guaranteed loans can only be used for residential purposes, and not to purchase a business.
This means that some farm properties may not be eligible for purchase using a VA-backed home loan.
This means that some farm properties may not be eligible for purchase using a VA-backed home loan.
General Guidance Loans for farm dwellings are appraised the same way as for nonfarm-type dwellings:
• VA does not limit the number of acres a VA-guaranteed property may have.
• VA does not limit the number of acres a VA-guaranteed property may have.
• The appraisal of properties with acreage should not pose a problem, as long as similar properties in the area were recently sold primarily for residential use. This may include improvements not typically considered residential, like barns, sheds, corrals, stables and pastures.
• For VA purposes, the value must not include livestock, crops, or farm equipment and supplies. Individual improvements not typically considered residential will be valued at fair market value. This includes barns, sheds, corrals, stables, pastures, etc. Underwriting guidelines are generally the same as for nonfarm-type dwellings
• For example, some or all of the income necessary to support the loan payments may come from farming operations. In this case, VA must verify the Veteran’s ability and experience as a farm operator.
VA Loans require no down payment and allow you to qualify for a more expensive home. Plus, today mortgage rates on VA loans are very low, making homes even more affordable.
The VA doesn’t actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan.
VA Home Mortgage Loan Advantages vs Other Mortgage Loan Options---
• For VA purposes, the value must not include livestock, crops, or farm equipment and supplies. Individual improvements not typically considered residential will be valued at fair market value. This includes barns, sheds, corrals, stables, pastures, etc. Underwriting guidelines are generally the same as for nonfarm-type dwellings
• For example, some or all of the income necessary to support the loan payments may come from farming operations. In this case, VA must verify the Veteran’s ability and experience as a farm operator.
VA Funding Fee Explained
The VA Funding Fee is paid directly to the Department of Veterans Affairs and is the reason they can guarantee this no-money-down loan program. This fee is paid so that VA eligible borrowers can enjoy loan benefits such as $0 down financing and no PMI payments.
VA Funding Fee Chart for Kentucky Mortgage Loans
The Funding Fee is calculated by looking at 5 different factors:
Loan amount, loan type (Purchase or Refinance), type of service, down payment (if any) and prior VA loan use. Take a look at the charts below to see how the VA funding fee varies based on these factors.
The following do NOT pay the VA funding fee:
• Veteran receiving VA compensation for a service-connected disability;
• Veteran entitled to receive VA compensation for a service-connected disability, but receives retirement pay or active service pay;
• Surviving spouse of a Veteran who died in active service or from a service-connected disability;
• Servicemember on Active Duty who provides, on or before date of loan closing, evidence of having been awarded the Purple Heart.
VA Loans require no down payment and allow you to qualify for a more expensive home. Plus, today mortgage rates on VA loans are very low, making homes even more affordable.
The VA doesn’t actually make loans. Instead, it insures loans so that if buyers default for some reason, the lenders will get their money. This encourages lenders to give mortgages to people who might not otherwise qualify for a loan.
VA Home Mortgage Loan Advantages vs Other Mortgage Loan Options---
VA home loans do not require a down payment, unless the purchase price is more than the appraised value or in excess of current loan limits.
VA home loans have limitations on which closing costs may be assessed to the veteran.
VA home loans have no prepaid without penalty.
Maximum (zero down) VA loan has increased to match conforming loans!
VA home loans may have forbearance extended to worthy VA homeowners experiencing temporary financial difficulty
VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties
Rates are competitive with conventional loan interest rates.
VA home loans do not require mortgage insurance premiums.
Although there is no down payment required – There are still lender closing costs, but the seller usually pays ALL of the veteran’s closing costs (and with a $0 down payment, the veteran can literally purchase a home for nothing).
VA FastTrack IRRRL Streamline Refinance
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We are sensitive to the needs of our American Veterans. But before you get a VA loan, you will need a Certificate of Eligibility and your DD-214. If you do not have one, or cannot find it, you must contact the VA to get one. Click HERE for details on how to obtain these forms.
When buying a home in Kentucky, the VA still requires a borrower to have sufficient and adequate income to cover the repayment of the mortgage. Before a borrower can be approved for a Kentucky VA home mortgage loan, the stability of income and the continuance of the borrower’s income must be established through acceptable sources of income, the borrower’s past employment record, and the employer’s confirmation of continued employment must be established.
Stability of a person’s income is generally derived from their employment history. VA requires verification for the previous two full years and must be documented through lender verifications of previous employment or W-2′s. This income must be analyzed to determine whether it can be expected to continue through the first 3 years of the mortgage loan (if the borrower intends to retire during this period, the expected retirement income, social security benefits, etc. should be used). Any gaps in employment must be reasonably explained by the borrower. Schooling or education for the borrower’s profession (e.g. nursing school) can be counted towards the 2 year requirement. Allowances for seasonal employment, such as is typical in the building trades for example, may be used.
VA STREAMLINE REFINANCE
An “Interest Rate Reduction Refinance Loan” (IRRRL) or Streamline Refinance allows Veterans to refinance their current mortgage interest rate to a lower rate than they are currently paying. This program is only available to veterans who are refinancing their original VA mortgage in which they utilized their original eligibility.
Loan Conditions:
■The VA charges ½ percent funding fee to guarantee the IRRRL Loan.
■There is no cash out on an IRRRL loan.
■The loan being refinanced must be current and have a perfect pay history for the last 12 months.
■2nd mortgages cannot be included and must subordinate.
■No assumptions are allowed.
■This loan can be done with “no out of pocket money” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
VA Cash-Out Refinance
Cash-out refinances on properties owned more than one year prior to the refinance are permitted on owner occupied principal residences only, and are limited to 90% of the appraised value plus the allowable closing costs.
A cash-out refinance is when a borrower refinances their current mortgage for more than they owe in order to pull out the built up equity that has accrued in the home. The amount a home owner can borrower is limited by the value of the property compared to the loan amount (otherwise known as the loan-to-value or LTV).
The following are basic requirements of a cash-out VA refinance loan:
■If the property was purchased less than one year preceding the refinance, the borrower is allowed to refinance up to 90% of the original sales price plus the allowable new closing costs or the appraised value plus the allowable closing costs (whichever is lesser)
■If the property was purchased more than one year preceding the refinance, the borrower can cash-out 90% of the the appraised value plus the allowable closing costs
■Applies to owner occupied properties only
■2nd mortgages may be paid off with the cash-out refinance (the second mortgage must be at least 12 months old)
■Loan amounts may not exceed 90% of the appraised value.
■The borrower must have sufficient entitlement for the loan (not including any existing entitlement that was used for loans to be paid off by the refinance
■There must be a first lien against the property
■If the new loan is to refinance an existing mortgage to buy out an ex-spouse’s equity, a divorce decree or settlement agreement must be provided to document the equity awarded to the ex-spouse
■All borrowers must credit qualify
■A funding fee of 3.00% will be added to the loan amount at time of closing (there are no refunds for previous funding fees assessed by the VA).
■Borrower may receive cash proceeds at closing
■Maximum loan term is 30 years plus 32 days
Related articles
■VA Home Loan Centers Announces Summer Stimulus Offer (prweb.com)
■Louisville Kentucky VA Mortgage and home loan Program Quick Reference (louisvillekymortgage.net)
■Tips From A VA Loan Mortgage Expert (prweb.com)
■LowVARates Advocates for Overseas Military (prweb.com)
■Overseas Military May Miss Out On Low VA Loan Interest Rates (prweb.com)
The following is a list of documents that may be required to process your VA mortgage loan:
•One full month's worth of pay stubs
•Last 2 years W-2's
•If self employed: Last 2 years tax returns with all schedules (if you are using commission, dividend or rental income to qualify then you will also need to provide your tax returns)
•Address and phone number of all employers for the last two years.
•Address and phone number for all landlords for the last two years.
•Copy of your DD214
•Your Original VA Certificate of Eligibility (we can help you get this if needed)
•Copies of social security, pension, and/or retirement award letters (if applicable)
•Last two months bank statements for all accounts
•Documentation to support your funds to close
•Explanation for any derogatory credit (if applicable)
•Bankruptcy and discharge paperwork (if applicable)
•Divorce decree and settlement paperwork (if applicable)
IRRRL stands for Interest Rate Reduction Refinancing Loan. You may see it referred to as a "Streamline" or a "VA to VA." Except when refinancing an existing Louisville VA guaranteed adjustable rate mortgage (ARM) to a fixed rate, it must result in a lower interest rate. When refinancing from an existing VA ARM loan to a fixed rate, the interest rate may increase.
No appraisal or credit underwriting package is required by VA. You should be aware, however, that lenders may require an appraisal and credit report anyway.
certificate of eligibility is not required. Your lender may use our e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.
An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs. (Remember: The interest rate on the new loan must be lower than the rate on the old loan unless you refinance an ARM to a fixed rate mortgage).
No lender is required to make you an IRRRL, however, any lender of your choice may process your application for an IRRRL. While it might be the best place to start shopping for an IRRRL, you do not have to go to the lender you make your payments to now or to the lender from whom you originally obtained your VA Loan.
Some lenders may say that VA requires certain closing costs to be charged and included in the loan. Remember - The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.
You must NOT receive any cash from the loan proceeds.
An IRRRL can be done only if you have already used your eligibility for a Louisville VA loan on the property you intend to refinance. It must be a VA to VA refinance, and it will reuse the entitlement you originally used. You may have used your entitlement by obtaining a Louisville VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.
The occupancy requirement for an IRRRL is different from other Louisville VA loans. When you originally got your Louisville VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.
The loan may not exceed the sum of the outstanding balance on the existing Louisville KY VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points. You may also add up to $6,000 of energy efficiency improvements into the loan.
NOTE: Adding all of these items into your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be. Also, you could have difficulty selling the house for enough to pay off your loan balance.
Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you a lot of money in interest over the life of the loan, if the reduction in the interest rate is not at least one percent (two percent is better) and lots of new loan costs are rolled into the new loan, you may see a very large increase in your monthly payment.
Beware: It could be a bigger increase than you can afford
No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new Louisville KY VA loan will be a first mortgage.
Veterans, service members and others who qualify have what is called an entitlement, which is basically a promise from the Department of Veterans Affairs to provide a financial guaranty on a mortgage issued by one of its approved lenders. The VA doesn't issue home loans. Instead, it guarantees a portion of each. That guaranty is important to lenders and helps borrowers who might otherwise struggle to secure financing. Having a VA entitlement means you have a financial guaranty from the Department of Veterans Affairs.
VA loans are available to some non-military personnel, including both unmarried and remarried spouses. An unmarried spouse whose veteran died on active duty or because of a disability connected to his or her service is eligible for VA home loan benefits.
Surviving spouses who obtained a VA loan with the veteran before his or her death can also obtain a VA Interest Rate Reduction Refinance Loan, better known as a VA Streamline refinance. Surviving spouses who remarried upon or after turning age 57 and on or after December 16, 2003, may be eligible for a VA home loan. Surviving spouses who remarried before that date are no longer eligible to participate.
The spouse of an active duty member who is listed as missing in action (MIA) or a prisoner of war (POW) for at least 90 days is eligible for one-time use of the VA home loan benefit.
The Certificate of Eligibility is a formal VA document that certifies what entitlement, if any, a military member has for a VA home loan. Obtaining the Certificate of Eligibility is a crucial step in the process. This is the only verifiable way to determine a veteran's eligibility and entitlement. Without a Certificate of Eligibility, prospective borrowers cannot complete the lending process. Veterans can obtain their Certificate of Eligibility directly from the VA, which typically takes a few weeks. Veterans United Home Loans uses an automated system to get your Certificate of Eligibility in minutes.
There are basic eligibility requirements for veterans and service members, along with members of the Reserves, the National Guard and surviving spouses.
You May Be Eligible for a VA Loan If Any One of the Following are True:
• You served 181 days during peacetime (Active Duty)
• You served 90 days during war time (Active Duty)
• You served 6 years in the Reserves or National Guard
• You are the spouse of a service member who died in the line of duty or because of a service-connected disability.
The only way to verify a veteran's eligibility for a VA loan is to obtain a Certificate of Eligibility. Veterans can obtain their Certificate of Eligibility directly from the VA, which typically takes a few weeks. Veterans United Home Loans uses an automated system to get your Certificate of Eligibility in minutes.
It's important to remember that not everyone eligible for a VA loan ultimately secures one. Prospective borrowers still have to satisfy credit and underwriting standards set by both the VA and the lender.
Not everyone eligible for a VA loan ultimately secures one. Prospective borrowers still have to satisfy credit and underwriting standards set by both the VA and the lender. Getting prequalified for a loan is a basic step that borrowers can complete online or over the phone. This step gives veterans a sense of their purchasing power and lays the foundation for the credit and underwriting process. But it is only a first step. Veterans with sufficient credit scores will move toward loan preapproval, which is a more formal stage desired by home sellers and real estate agents.
Basic Allowance for Housing, formerly known as Basic Allowance for Quarters, is a key asset that can help service members qualify for and afford a VA mortgage. This monthly housing allowance can be counted as income provided it's stable and likely to continue. The same is true for other military allowances and forms of bonus pay. Lenders have to make sure the payments are reliable and consistent. Qualified borrowers can use BAH to cover some or all of their monthly mortgage payment.
Veterans who want to fully restore their entitlement after paying off their VA loan can seek a full restoration of their entitlement. The most common example is when a borrower sells their home and uses the sale proceeds to pay off their original mortgage. At that point, the veteran's previously used entitlement is no longer tied up in the original home. Veterans then have to fill out a VA form and submit documentation to the agency.
Qualified borrowers have two layers of entitlement. Together, the first tier and the second tier combine to create the VA guaranty. The second, additional layer of entitlement can help borrowers who have experienced foreclosures or other major problems with VA loans. Thanks to second-tier entitlement, even a veteran who defaults on a VA loan can still purchase again. It's important to note that on a second-tier entitlement purchase, there's a minimum loan amount of $144,000.
No. The VA Loan is designed only for primary residences that are occupied by the owners of the properties.
VA Loan Qualification
The VA sets broad requirements and guidelines for military borrowers. There are no income requirements or credit requirements to participate in the VA Loan Guaranty program. The VA simply requires that borrowers represent a satisfactory credit risk. But VA lenders ultimately issue the loans, and they have their own unique requirements, especially when it comes to credit scores. So prospective borrowers have to satisfy both the VA and the agency's approved lenders in order to secure home financing.
In today's economic climate, VA lenders are looking for solid credit scores. Lenders will determine at the outset whether your credit score meets its benchmark. But veterans whose score falls short shouldn't lose hope. We have an entire department dedicated to helping people raise their credit scores and prequalify for the loan they deserve. Our Department of Secondary Approval works one-on-one with veterans, providing simple and concrete steps to boosting their financial health. Best of all, it's absolutely free.
Veterans and service members can have someone sign on the loan with them, although there are certain restrictions. For a VA loan, that other person, known as a co-borrower, must be either a spouse or another veteran. Parents, friends and significant others who don't fall under one of those two headings cannot be a co-borrower on a VA loan. Married veterans can obtain a VA loan on their own, but if they live in a community property state, their spouse's active debt and income will be factored into the loan application.
VA-approved lenders have to make sure prospective borrowers have enough steady income to meet their monthly expenses, including a new mortgage payment. Lenders are generally looking for at least two years of stable employment and income from the same employer and job type. Reliable, documented income can be included from a host of sources, including:
• Base pay & allowances
• Non-military employment
• Retirement income
• Self-Employment
• Commissions
• Rental income
• A spouse's income
• Alimony/child care
To count income from overtime work, part-time jobs, second jobs and bonuses, veterans need to show that same two-year period of stability. Veterans who are self-employed or who make a living in the building trades, doing seasonal work or working mostly on commission have some additional paperwork hurdles to face. Tax returns for the previous two years will be essential in verifying income.
A bankruptcy or foreclosure doesn't automatically disqualify you from getting a VA loan. But a lot of it depends on when the event occurred. In most cases, veterans will not be able to secure VA financing for two years after a bankruptcy or foreclosure. The VA has some exceptions that allow military members to participate in the program before that two-year mark. But, remember that VA-approved lenders, and not the VA, ultimately issue the loan. Lenders have more stringent standards that rise above the VA's requirements. And that means there's almost no way for a borrower to secure financing for at least two years.
Lenders will file paperwork with the IRS to obtain tax records for prospective borrowers. This information plays a crucial role in determining a veteran's financial health and ability to handle the fiscal responsibilities associated with homeownership. Veterans can help speed through the process by having that information on hand, but it isn't necessary.
Rates and Loan Costs
The VA has cap on the fees that veterans can pay to obtain a VA loan. Generally, VA lenders are allowed to charge a 1 percent origination fee, plus another percent to cover administrative and other costs. On a VA loan, sellers can pay up to 6 percent of the loan amount in closing costs and concessions. The one charge most VA borrowers can't escape is the VA Funding Fee, a mandatory cost that helps keep the home loan program running. Borrowers with service-connected disabilities can receive an exemption from the VA Funding Fee.
The VA Funding Fee is a mandatory fee applied to both purchase and refinance loans. It helps keep the home loan program running. The fee is a percentage of the loan amount, and it changes depending on several factors, including whether it's a purchase or a refinance, how many VA loans you've had in the past and the type of military service. You can see the full breakdown and even calculate your exact fee by visiting VAFundingFee.com.
Mortgage rates are shaped by a host of economic factors. Lenders set their rates based on what's happening in the bond market and in the greater financial landscape. Interest rates change constantly, often multiple times per day, which is why it's important to talk with your loan officer about when to lock in your rate. As with other lending products, military members with excellent credit can secure better interest rates and loan terms than those with less sterling credit. But, in general, VA loans have consistently lower rates than conventional loans.
Veterans can explore adjustable rate mortgage options with a VA loan. Today, the most common ARM for VA borrowers is either a 3/1 or 5/1 Hybrid, where the borrower gets a fixed interest rate for the first three or five years of the loan term. A low interest rate during those first few years can make a huge difference for veterans who might need cash to pay off other debts or obligations. ARMs are also a potential option for service members who only plan to stay in their homes for three to five years. Not every VA-approved lender offers ARMs. Many states require lenders to have additional compliance disclosures and counseling initiatives in order to satisfy government requirements.
Your credit score plays an important role in determining your mortgage rate. Prospective borrowers with solid credit can expect lower rates and better terms than those with fair to middling scores. The VA requires borrowers to be a satisfactory credit risk in order to qualify for a government-backed loan. VA lenders have their own additional requirements and, in the current lending climate, will pay close attention to an applicant's score. It's more important than ever to get a handle on your credit profile, get caught up on any outstanding debts and responsibly use credit. Put yourself in the best position possible when it comes time to start the home-buying process.
On a VA purchase loan, veterans can borrow up to the appraised value of the home, plus some costs and fees associated with the loan. Homebuyers interested in making their home more energy efficient can add up to $6,000 in improvements through an Energy Efficient Mortgage. On a VA Cash-Out Refinance, we can help homeowners refinance up to 100 percent of their home's value. Homeowners can use that cash to pay bills, renovate their home and other key uses.
Your VA entitlement isn't a one-time benefit. Borrowers who qualify can utilize their VA home loan benefits over and over. Most veterans will only ever have one VA-backed mortgage at a time. But there are unique situations where veterans can have more than one VA loan at one time. Most of those circumstances are related to relocation needs, including deployments and jobs. But it's important to remember that VA loans are for primary residences. You can't use your home loan benefits to purchase investment properties or businesses.
As the nation's leading dedicated VA lender, we've worked hard to make the VA loan process as simple and streamlined as possible. VA loans have less stringent requirements than other lending programs, and that's one of the key benefits for veterans and active duty personnel. Prospective borrowers have to meet basic financial and credit-related benchmarks to satisfy both the VA and the lender. Veterans receive a financial guaranty from the VA, and that guaranty gives lenders the confidence to issue no-down payment loans with great rates and terms.
The VA has two major refinance programs. One of them, the Cash-Out Refinance, helps homeowners extract cash from their home's equity while obtaining a lower interest rate. We can help veterans refinance up to 100 percent of their home's appraised value. Most lenders are currently capped at 90 percent. The process for obtaining a Cash-Out Refinance is similar to the process borrowers go through for a VA purchase loan. Veterans with a conventional or FHA mortgage can refinance into a VA loan using the Cash-Out program.
Contrary to what you might have read or heard, there isn't a maximum loan amount on a VA loan. But there is a maximum amount the VA will guaranty without the borrower having some manner of down payment. That's what industry people are referring to when they talk about VA loan limits.
Can I borrow extra money to make home improvements?
VA borrowers can add up to $6,000 to their loan to make energy efficiency improvements to their home. Known as an energy efficiency mortgage, or EEM, these unique loan products allow homeowners to make select upgrades and repairs to the property in order to maximize energy efficiencies. Spending money at the outset on energy improvements can ultimately lower heating, cooling and other related energy costs for years to come. That monthly savings can be funneled into additional payments to the mortgage principal or dozens of other household necessities. Veterans interested in an EEM should consult with their lender and be sure to arrange for a home energy audit from a professional firm.
VA lenders have to obtain all kinds of official paperwork in order to process a loan, from the borrower's Certificate of Eligibility to tax returns and other crucial documents. It's easy for paperwork to get lost over time, so borrowers shouldn't worry if they can't locate their discharge documents or other important pieces of paper. We can obtain fresh copies of your most important documents with no hassle. Borrowers can also contact the VA and other entities to secure the paperwork themselves. The lack of this paperwork won't necessarily derail the loan process, but it's best to work with the lender as quickly as possible to take care of document needs.
VA loans do not have any kind of prepayment policies. That means borrowers can pay off their loans early without penalty. That's a significant benefit for homeowners who want to cut down on their interest costs over time. Paying an additional $50 or $100 a month toward your premium can shave off years and tens of thousands of dollars from your 30-year fixed-rate mortgage.
With most loan products, when a home is sold the existing mortgage must be paid off. But there are instances when a homebuyer can take over the loan balance, interest rate and terms of the existing mortgage. This is referred to as "assuming" the loan. VA loans are one of the only fixed-rate mortgages that are assumable. This key difference gives homeowners increased flexibility when the time comes to sell their home.
For the vast majority of veterans, active duty service members and military families, the VA loan represents the most flexible and powerful loan program on the market. Qualified borrowers can purchase a home without a down payment or out-of-pocket spending. But there are some cases when a VA loan may not represent the best fit. Veterans with significant cash reserves who can cover a 20-percent down payment may want to consider conventional financing. But that isn't the typical financial situation for most military borrowers. For everyone else, VA loans often make the most financial sense and allow veterans to get the biggest bang for their buck.
The VA has two major refinance programs. One, the Interest Rate Reduction Refinance Loan, better known as a VA Streamline, helps homeowners get into a lower-rate mortgage to reduce their monthly payment. VA Streamlines come with minimal hassle and paperwork. The VA does not require appraisals or credit checks on Streamlines, but some lenders have recently made them mandatory. We are still able to process some Streamlines without an appraisal, which is a tremendous benefit given the decline in home values across the country. Homeowners have to pay closing costs on a VA Streamline. But these can be rolled into the overall loan amount, along with up to $6,000 in energy efficiency improvements.
Veterans and active duty homeowners who qualify can refinance into a VA loan using the program's cash-out refinance program. The process for obtaining a Cash-Out Refinance is similar to the process borrowers go through for a VA purchase loan, from the income verification and debt-to-income ratio to a home appraisal. Qualified homeowners with conventional or FHA mortgages do not have to take out cash when they refinance into a VA loan. But they are ineligible for the simpler VA Streamline program.
• To purchase a residence that's owned and occupied by the veteran.
• To refinance an existing VA-guaranteed or direct loan in order to lower the current interest rate.
• To refinance in order to take out cash.
• To repair, alter or improve a residence owned by a veteran.
• To simultaneously purchase and improve a home
• To make energy-efficiency improvements in conjunction with a VA purchase or refinance loan.
• To purchase up to four one-family residential units in a condo development approved by the VA. One of those four units must be used as the borrower's primary residence.
• To purchase a farm residence to be owned and occupied by the veteran. The property cannot be a working farm or an income-producing property.
You cannot use a VA loan to purchase vacation homes or income properties
Text/call: 502-905-3708
email: kentuckyloan@gmail.com
NMLS ID# 57916, (www.nmlsconsumeraccess.org).
VA home loans have limitations on which closing costs may be assessed to the veteran.
VA home loans have no prepaid without penalty.
Maximum (zero down) VA loan has increased to match conforming loans!
VA home loans may have forbearance extended to worthy VA homeowners experiencing temporary financial difficulty
VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties
Rates are competitive with conventional loan interest rates.
VA home loans do not require mortgage insurance premiums.
Although there is no down payment required – There are still lender closing costs, but the seller usually pays ALL of the veteran’s closing costs (and with a $0 down payment, the veteran can literally purchase a home for nothing).
VA FastTrack IRRRL Streamline Refinance
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We are sensitive to the needs of our American Veterans. But before you get a VA loan, you will need a Certificate of Eligibility and your DD-214. If you do not have one, or cannot find it, you must contact the VA to get one. Click HERE for details on how to obtain these forms.
Income Guidelines for VA Home Loans
When buying a home in Kentucky, the VA still requires a borrower to have sufficient and adequate income to cover the repayment of the mortgage. Before a borrower can be approved for a Kentucky VA home mortgage loan, the stability of income and the continuance of the borrower’s income must be established through acceptable sources of income, the borrower’s past employment record, and the employer’s confirmation of continued employment must be established.
Stability of a person’s income is generally derived from their employment history. VA requires verification for the previous two full years and must be documented through lender verifications of previous employment or W-2′s. This income must be analyzed to determine whether it can be expected to continue through the first 3 years of the mortgage loan (if the borrower intends to retire during this period, the expected retirement income, social security benefits, etc. should be used). Any gaps in employment must be reasonably explained by the borrower. Schooling or education for the borrower’s profession (e.g. nursing school) can be counted towards the 2 year requirement. Allowances for seasonal employment, such as is typical in the building trades for example, may be used.
VA STREAMLINE REFINANCE
An “Interest Rate Reduction Refinance Loan” (IRRRL) or Streamline Refinance allows Veterans to refinance their current mortgage interest rate to a lower rate than they are currently paying. This program is only available to veterans who are refinancing their original VA mortgage in which they utilized their original eligibility.
Loan Conditions:
■The VA charges ½ percent funding fee to guarantee the IRRRL Loan.
■There is no cash out on an IRRRL loan.
■The loan being refinanced must be current and have a perfect pay history for the last 12 months.
■2nd mortgages cannot be included and must subordinate.
■No assumptions are allowed.
■This loan can be done with “no out of pocket money” by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs.
VA Cash-Out Refinance
Cash-out refinances on properties owned more than one year prior to the refinance are permitted on owner occupied principal residences only, and are limited to 90% of the appraised value plus the allowable closing costs.
A cash-out refinance is when a borrower refinances their current mortgage for more than they owe in order to pull out the built up equity that has accrued in the home. The amount a home owner can borrower is limited by the value of the property compared to the loan amount (otherwise known as the loan-to-value or LTV).
The following are basic requirements of a cash-out VA refinance loan:
■If the property was purchased less than one year preceding the refinance, the borrower is allowed to refinance up to 90% of the original sales price plus the allowable new closing costs or the appraised value plus the allowable closing costs (whichever is lesser)
■If the property was purchased more than one year preceding the refinance, the borrower can cash-out 90% of the the appraised value plus the allowable closing costs
■Applies to owner occupied properties only
■2nd mortgages may be paid off with the cash-out refinance (the second mortgage must be at least 12 months old)
■Loan amounts may not exceed 90% of the appraised value.
■The borrower must have sufficient entitlement for the loan (not including any existing entitlement that was used for loans to be paid off by the refinance
■There must be a first lien against the property
■If the new loan is to refinance an existing mortgage to buy out an ex-spouse’s equity, a divorce decree or settlement agreement must be provided to document the equity awarded to the ex-spouse
■All borrowers must credit qualify
■A funding fee of 3.00% will be added to the loan amount at time of closing (there are no refunds for previous funding fees assessed by the VA).
■Borrower may receive cash proceeds at closing
■Maximum loan term is 30 years plus 32 days
Related articles
■VA Home Loan Centers Announces Summer Stimulus Offer (prweb.com)
■Louisville Kentucky VA Mortgage and home loan Program Quick Reference (louisvillekymortgage.net)
■Tips From A VA Loan Mortgage Expert (prweb.com)
■LowVARates Advocates for Overseas Military (prweb.com)
■Overseas Military May Miss Out On Low VA Loan Interest Rates (prweb.com)
VA Mortgage Loan Checklist
The following is a list of documents that may be required to process your VA mortgage loan:
•One full month's worth of pay stubs
•Last 2 years W-2's
•If self employed: Last 2 years tax returns with all schedules (if you are using commission, dividend or rental income to qualify then you will also need to provide your tax returns)
•Address and phone number of all employers for the last two years.
•Address and phone number for all landlords for the last two years.
•Copy of your DD214
•Your Original VA Certificate of Eligibility (we can help you get this if needed)
•Copies of social security, pension, and/or retirement award letters (if applicable)
•Last two months bank statements for all accounts
•Documentation to support your funds to close
•Explanation for any derogatory credit (if applicable)
•Bankruptcy and discharge paperwork (if applicable)
•Divorce decree and settlement paperwork (if applicable)
IRRRL stands for Interest Rate Reduction Refinancing Loan. You may see it referred to as a "Streamline" or a "VA to VA." Except when refinancing an existing Louisville VA guaranteed adjustable rate mortgage (ARM) to a fixed rate, it must result in a lower interest rate. When refinancing from an existing VA ARM loan to a fixed rate, the interest rate may increase.
No appraisal or credit underwriting package is required by VA. You should be aware, however, that lenders may require an appraisal and credit report anyway.
certificate of eligibility is not required. Your lender may use our e-mail confirmation procedure for interest rate reduction refinance in lieu of a certificate of eligibility.
An IRRRL may be done with "no money out of pocket" by including all costs in the new loan or by making the new loan at an interest rate high enough to enable the lender to pay the costs. (Remember: The interest rate on the new loan must be lower than the rate on the old loan unless you refinance an ARM to a fixed rate mortgage).
No lender is required to make you an IRRRL, however, any lender of your choice may process your application for an IRRRL. While it might be the best place to start shopping for an IRRRL, you do not have to go to the lender you make your payments to now or to the lender from whom you originally obtained your VA Loan.
Some lenders may say that VA requires certain closing costs to be charged and included in the loan. Remember - The only cost required by VA is a funding fee of one-half of one percent of the loan amount which may be paid in cash or included in the loan.
You must NOT receive any cash from the loan proceeds.
An IRRRL can be done only if you have already used your eligibility for a Louisville VA loan on the property you intend to refinance. It must be a VA to VA refinance, and it will reuse the entitlement you originally used. You may have used your entitlement by obtaining a Louisville VA loan when you bought your house, or by substituting your eligibility for that of the seller, if you assumed the loan. If you have your Certificate of Eligibility, take it to the lender to show the prior use of your entitlement.
The occupancy requirement for an IRRRL is different from other Louisville VA loans. When you originally got your Louisville VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL you need only certify that you previously occupied it.
The loan may not exceed the sum of the outstanding balance on the existing Louisville KY VA loan, plus allowable fees and closing costs, including funding fee and up to 2 discount points. You may also add up to $6,000 of energy efficiency improvements into the loan.
NOTE: Adding all of these items into your loan may result in a situation in which you owe more than the fair market value of the house, and will reduce the benefit of refinancing since your payment will not be lowered as much as it could be. Also, you could have difficulty selling the house for enough to pay off your loan balance.
Some lenders offer IRRRLs as an opportunity to reduce the term of your loan from 30 years to 15 years. While this can save you a lot of money in interest over the life of the loan, if the reduction in the interest rate is not at least one percent (two percent is better) and lots of new loan costs are rolled into the new loan, you may see a very large increase in your monthly payment.
Beware: It could be a bigger increase than you can afford
No loan other than the existing VA loan may be paid from the proceeds of an IRRRL. If you have a second mortgage, the holder must agree to subordinate that lien so that your new Louisville KY VA loan will be a first mortgage.
VA Loan Eligibility
What is the VA Loan entitlement?
Veterans, service members and others who qualify have what is called an entitlement, which is basically a promise from the Department of Veterans Affairs to provide a financial guaranty on a mortgage issued by one of its approved lenders. The VA doesn't issue home loans. Instead, it guarantees a portion of each. That guaranty is important to lenders and helps borrowers who might otherwise struggle to secure financing. Having a VA entitlement means you have a financial guaranty from the Department of Veterans Affairs.
Am I eligible as a spouse of a deceased veteran?
VA loans are available to some non-military personnel, including both unmarried and remarried spouses. An unmarried spouse whose veteran died on active duty or because of a disability connected to his or her service is eligible for VA home loan benefits.
Surviving spouses who obtained a VA loan with the veteran before his or her death can also obtain a VA Interest Rate Reduction Refinance Loan, better known as a VA Streamline refinance. Surviving spouses who remarried upon or after turning age 57 and on or after December 16, 2003, may be eligible for a VA home loan. Surviving spouses who remarried before that date are no longer eligible to participate.
The spouse of an active duty member who is listed as missing in action (MIA) or a prisoner of war (POW) for at least 90 days is eligible for one-time use of the VA home loan benefit.
How can I get my Certificate of Eligibility?
The Certificate of Eligibility is a formal VA document that certifies what entitlement, if any, a military member has for a VA home loan. Obtaining the Certificate of Eligibility is a crucial step in the process. This is the only verifiable way to determine a veteran's eligibility and entitlement. Without a Certificate of Eligibility, prospective borrowers cannot complete the lending process. Veterans can obtain their Certificate of Eligibility directly from the VA, which typically takes a few weeks. Veterans United Home Loans uses an automated system to get your Certificate of Eligibility in minutes.
Who is eligible for the VA Loan?
There are basic eligibility requirements for veterans and service members, along with members of the Reserves, the National Guard and surviving spouses.
You May Be Eligible for a VA Loan If Any One of the Following are True:
• You served 181 days during peacetime (Active Duty)
• You served 90 days during war time (Active Duty)
• You served 6 years in the Reserves or National Guard
• You are the spouse of a service member who died in the line of duty or because of a service-connected disability.
The only way to verify a veteran's eligibility for a VA loan is to obtain a Certificate of Eligibility. Veterans can obtain their Certificate of Eligibility directly from the VA, which typically takes a few weeks. Veterans United Home Loans uses an automated system to get your Certificate of Eligibility in minutes.
It's important to remember that not everyone eligible for a VA loan ultimately secures one. Prospective borrowers still have to satisfy credit and underwriting standards set by both the VA and the lender.
What is the difference between eligibility and prequalification?
Not everyone eligible for a VA loan ultimately secures one. Prospective borrowers still have to satisfy credit and underwriting standards set by both the VA and the lender. Getting prequalified for a loan is a basic step that borrowers can complete online or over the phone. This step gives veterans a sense of their purchasing power and lays the foundation for the credit and underwriting process. But it is only a first step. Veterans with sufficient credit scores will move toward loan preapproval, which is a more formal stage desired by home sellers and real estate agents.
How do basic and bonus entitlements work?
Basic Allowance for Housing, formerly known as Basic Allowance for Quarters, is a key asset that can help service members qualify for and afford a VA mortgage. This monthly housing allowance can be counted as income provided it's stable and likely to continue. The same is true for other military allowances and forms of bonus pay. Lenders have to make sure the payments are reliable and consistent. Qualified borrowers can use BAH to cover some or all of their monthly mortgage payment.
How do I restore my entitlement once I pay off my previous VA Loan?
Veterans who want to fully restore their entitlement after paying off their VA loan can seek a full restoration of their entitlement. The most common example is when a borrower sells their home and uses the sale proceeds to pay off their original mortgage. At that point, the veteran's previously used entitlement is no longer tied up in the original home. Veterans then have to fill out a VA form and submit documentation to the agency.
What is 2nd Tier Entitlement?
Qualified borrowers have two layers of entitlement. Together, the first tier and the second tier combine to create the VA guaranty. The second, additional layer of entitlement can help borrowers who have experienced foreclosures or other major problems with VA loans. Thanks to second-tier entitlement, even a veteran who defaults on a VA loan can still purchase again. It's important to note that on a second-tier entitlement purchase, there's a minimum loan amount of $144,000.
Can I use the VA Loan for a second home or rental properties?
No. The VA Loan is designed only for primary residences that are occupied by the owners of the properties.
VA Loan Qualification
Who sets the VA Loan guidelines, the VA or my lender?
The VA sets broad requirements and guidelines for military borrowers. There are no income requirements or credit requirements to participate in the VA Loan Guaranty program. The VA simply requires that borrowers represent a satisfactory credit risk. But VA lenders ultimately issue the loans, and they have their own unique requirements, especially when it comes to credit scores. So prospective borrowers have to satisfy both the VA and the agency's approved lenders in order to secure home financing.
If I have bad credit, can I still get a VA Loan?
In today's economic climate, VA lenders are looking for solid credit scores. Lenders will determine at the outset whether your credit score meets its benchmark. But veterans whose score falls short shouldn't lose hope. We have an entire department dedicated to helping people raise their credit scores and prequalify for the loan they deserve. Our Department of Secondary Approval works one-on-one with veterans, providing simple and concrete steps to boosting their financial health. Best of all, it's absolutely free.
Can someone else sign on the loan with me?
Veterans and service members can have someone sign on the loan with them, although there are certain restrictions. For a VA loan, that other person, known as a co-borrower, must be either a spouse or another veteran. Parents, friends and significant others who don't fall under one of those two headings cannot be a co-borrower on a VA loan. Married veterans can obtain a VA loan on their own, but if they live in a community property state, their spouse's active debt and income will be factored into the loan application.
What income can I use to qualify for a VA Loan?
VA-approved lenders have to make sure prospective borrowers have enough steady income to meet their monthly expenses, including a new mortgage payment. Lenders are generally looking for at least two years of stable employment and income from the same employer and job type. Reliable, documented income can be included from a host of sources, including:
• Base pay & allowances
• Non-military employment
• Retirement income
• Self-Employment
• Commissions
• Rental income
• A spouse's income
• Alimony/child care
To count income from overtime work, part-time jobs, second jobs and bonuses, veterans need to show that same two-year period of stability. Veterans who are self-employed or who make a living in the building trades, doing seasonal work or working mostly on commission have some additional paperwork hurdles to face. Tax returns for the previous two years will be essential in verifying income.
How long do I have to wait after bankruptcy to get a VA Loan?
A bankruptcy or foreclosure doesn't automatically disqualify you from getting a VA loan. But a lot of it depends on when the event occurred. In most cases, veterans will not be able to secure VA financing for two years after a bankruptcy or foreclosure. The VA has some exceptions that allow military members to participate in the program before that two-year mark. But, remember that VA-approved lenders, and not the VA, ultimately issue the loan. Lenders have more stringent standards that rise above the VA's requirements. And that means there's almost no way for a borrower to secure financing for at least two years.
Do I need my tax returns to apply for a VA Loan?
Lenders will file paperwork with the IRS to obtain tax records for prospective borrowers. This information plays a crucial role in determining a veteran's financial health and ability to handle the fiscal responsibilities associated with homeownership. Veterans can help speed through the process by having that information on hand, but it isn't necessary.
Rates and Loan Costs
What fees should I expect to pay for my VA Loan?
The VA has cap on the fees that veterans can pay to obtain a VA loan. Generally, VA lenders are allowed to charge a 1 percent origination fee, plus another percent to cover administrative and other costs. On a VA loan, sellers can pay up to 6 percent of the loan amount in closing costs and concessions. The one charge most VA borrowers can't escape is the VA Funding Fee, a mandatory cost that helps keep the home loan program running. Borrowers with service-connected disabilities can receive an exemption from the VA Funding Fee.
What is the VA Funding Fee, and how do I calculate it?
The VA Funding Fee is a mandatory fee applied to both purchase and refinance loans. It helps keep the home loan program running. The fee is a percentage of the loan amount, and it changes depending on several factors, including whether it's a purchase or a refinance, how many VA loans you've had in the past and the type of military service. You can see the full breakdown and even calculate your exact fee by visiting VAFundingFee.com.
How are rates for VA Loans determined?
Mortgage rates are shaped by a host of economic factors. Lenders set their rates based on what's happening in the bond market and in the greater financial landscape. Interest rates change constantly, often multiple times per day, which is why it's important to talk with your loan officer about when to lock in your rate. As with other lending products, military members with excellent credit can secure better interest rates and loan terms than those with less sterling credit. But, in general, VA loans have consistently lower rates than conventional loans.
Does the VA Loan offer adjustable rates?
Veterans can explore adjustable rate mortgage options with a VA loan. Today, the most common ARM for VA borrowers is either a 3/1 or 5/1 Hybrid, where the borrower gets a fixed interest rate for the first three or five years of the loan term. A low interest rate during those first few years can make a huge difference for veterans who might need cash to pay off other debts or obligations. ARMs are also a potential option for service members who only plan to stay in their homes for three to five years. Not every VA-approved lender offers ARMs. Many states require lenders to have additional compliance disclosures and counseling initiatives in order to satisfy government requirements.
Does my credit score affect my VA Loan rate?
Your credit score plays an important role in determining your mortgage rate. Prospective borrowers with solid credit can expect lower rates and better terms than those with fair to middling scores. The VA requires borrowers to be a satisfactory credit risk in order to qualify for a government-backed loan. VA lenders have their own additional requirements and, in the current lending climate, will pay close attention to an applicant's score. It's more important than ever to get a handle on your credit profile, get caught up on any outstanding debts and responsibly use credit. Put yourself in the best position possible when it comes time to start the home-buying process.
VA Loan Guidelines
Can I borrow more than the value of my home with a VA loan?
On a VA purchase loan, veterans can borrow up to the appraised value of the home, plus some costs and fees associated with the loan. Homebuyers interested in making their home more energy efficient can add up to $6,000 in improvements through an Energy Efficient Mortgage. On a VA Cash-Out Refinance, we can help homeowners refinance up to 100 percent of their home's value. Homeowners can use that cash to pay bills, renovate their home and other key uses.
Can I have more than one VA loan at a time?
Your VA entitlement isn't a one-time benefit. Borrowers who qualify can utilize their VA home loan benefits over and over. Most veterans will only ever have one VA-backed mortgage at a time. But there are unique situations where veterans can have more than one VA loan at one time. Most of those circumstances are related to relocation needs, including deployments and jobs. But it's important to remember that VA loans are for primary residences. You can't use your home loan benefits to purchase investment properties or businesses.
How complicated is VA financing?
As the nation's leading dedicated VA lender, we've worked hard to make the VA loan process as simple and streamlined as possible. VA loans have less stringent requirements than other lending programs, and that's one of the key benefits for veterans and active duty personnel. Prospective borrowers have to meet basic financial and credit-related benchmarks to satisfy both the VA and the lender. Veterans receive a financial guaranty from the VA, and that guaranty gives lenders the confidence to issue no-down payment loans with great rates and terms.
When purchasing a home, does the VA Loan allow for cash back options?
The VA has two major refinance programs. One of them, the Cash-Out Refinance, helps homeowners extract cash from their home's equity while obtaining a lower interest rate. We can help veterans refinance up to 100 percent of their home's appraised value. Most lenders are currently capped at 90 percent. The process for obtaining a Cash-Out Refinance is similar to the process borrowers go through for a VA purchase loan. Veterans with a conventional or FHA mortgage can refinance into a VA loan using the Cash-Out program.
What is the maximum VA Home Loan?
Contrary to what you might have read or heard, there isn't a maximum loan amount on a VA loan. But there is a maximum amount the VA will guaranty without the borrower having some manner of down payment. That's what industry people are referring to when they talk about VA loan limits.
Can I borrow extra money to make home improvements?
VA borrowers can add up to $6,000 to their loan to make energy efficiency improvements to their home. Known as an energy efficiency mortgage, or EEM, these unique loan products allow homeowners to make select upgrades and repairs to the property in order to maximize energy efficiencies. Spending money at the outset on energy improvements can ultimately lower heating, cooling and other related energy costs for years to come. That monthly savings can be funneled into additional payments to the mortgage principal or dozens of other household necessities. Veterans interested in an EEM should consult with their lender and be sure to arrange for a home energy audit from a professional firm.
What if I don't have copies of my discharge paperwork?
VA lenders have to obtain all kinds of official paperwork in order to process a loan, from the borrower's Certificate of Eligibility to tax returns and other crucial documents. It's easy for paperwork to get lost over time, so borrowers shouldn't worry if they can't locate their discharge documents or other important pieces of paper. We can obtain fresh copies of your most important documents with no hassle. Borrowers can also contact the VA and other entities to secure the paperwork themselves. The lack of this paperwork won't necessarily derail the loan process, but it's best to work with the lender as quickly as possible to take care of document needs.
Can I pay off a VA Loan early?
VA loans do not have any kind of prepayment policies. That means borrowers can pay off their loans early without penalty. That's a significant benefit for homeowners who want to cut down on their interest costs over time. Paying an additional $50 or $100 a month toward your premium can shave off years and tens of thousands of dollars from your 30-year fixed-rate mortgage.
I see that VA Loans are assumable, what does that mean?
With most loan products, when a home is sold the existing mortgage must be paid off. But there are instances when a homebuyer can take over the loan balance, interest rate and terms of the existing mortgage. This is referred to as "assuming" the loan. VA loans are one of the only fixed-rate mortgages that are assumable. This key difference gives homeowners increased flexibility when the time comes to sell their home.
When is the VA Loan not my best option?
For the vast majority of veterans, active duty service members and military families, the VA loan represents the most flexible and powerful loan program on the market. Qualified borrowers can purchase a home without a down payment or out-of-pocket spending. But there are some cases when a VA loan may not represent the best fit. Veterans with significant cash reserves who can cover a 20-percent down payment may want to consider conventional financing. But that isn't the typical financial situation for most military borrowers. For everyone else, VA loans often make the most financial sense and allow veterans to get the biggest bang for their buck.
VA Refinancing
Can the VA Loan help me lower my monthly bills?
The VA has two major refinance programs. One, the Interest Rate Reduction Refinance Loan, better known as a VA Streamline, helps homeowners get into a lower-rate mortgage to reduce their monthly payment. VA Streamlines come with minimal hassle and paperwork. The VA does not require appraisals or credit checks on Streamlines, but some lenders have recently made them mandatory. We are still able to process some Streamlines without an appraisal, which is a tremendous benefit given the decline in home values across the country. Homeowners have to pay closing costs on a VA Streamline. But these can be rolled into the overall loan amount, along with up to $6,000 in energy efficiency improvements.
Can I refinance my home if I don't currently have a VA Loan?
Veterans and active duty homeowners who qualify can refinance into a VA loan using the program's cash-out refinance program. The process for obtaining a Cash-Out Refinance is similar to the process borrowers go through for a VA purchase loan, from the income verification and debt-to-income ratio to a home appraisal. Qualified homeowners with conventional or FHA mortgages do not have to take out cash when they refinance into a VA loan. But they are ineligible for the simpler VA Streamline program.
• To purchase a residence that's owned and occupied by the veteran.
• To refinance an existing VA-guaranteed or direct loan in order to lower the current interest rate.
• To refinance in order to take out cash.
• To repair, alter or improve a residence owned by a veteran.
• To simultaneously purchase and improve a home
• To make energy-efficiency improvements in conjunction with a VA purchase or refinance loan.
• To purchase up to four one-family residential units in a condo development approved by the VA. One of those four units must be used as the borrower's primary residence.
• To purchase a farm residence to be owned and occupied by the veteran. The property cannot be a working farm or an income-producing property.
You cannot use a VA loan to purchase vacation homes or income properties
Kentucky VA Termite Mortgage Information and Guideline Requirements
Joel Lobb Mortgage Loan Officer
Text/call: 502-905-3708
email: kentuckyloan@gmail.com
http://www.mylouisvillekentuckymortgage.com/
NMLS 57916 |
The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people.NMLS ID# 57916, (www.nmlsconsumeraccess.org).
