Military personnel have a tremendous benefit when considering buying a home.
The veteran’s administration allow lenders to offer 100% financing—that’s right NO DOWN PAYMENT.
If the soldier is currently in an active duty status, that status is verified by a Statement of Service document that the soldier gets from his/her commanding officer
If the soldier is a veteran, the lender will ask for a DD-214, which is a document that is given at the time of discharge.
Reservists supply an NG-22 form.
When the lender has the appropriate form, they can obtain the Certificate of Eligibility from the VA. All of this sounds really complicated, it’s not—takes about only about 2 days. It is however, the first step.
The certificate of Eligibility tells the lender the amount of the loan the veteran/soldier/reservist can get. If it’s the first time the eligibility has been used, that loan amount is $453,100 for the most of the country. Higher priced states like Hawaii, will have a different amount.
If the soldier/veteran/reservist has used their VA benefit before and that home has been sold, full eligibility is usually restored and the $453,100 amount applies.
Sometimes, the soldier/veteran/reservist still owns a home where they have used their VA benefit and full eligibility is not available. That’s why it is so important to take the time to jump through the documentation hoops so everyone knows what can be done.
Even though VA allows up to $453100, the veteran/soldier/reservist still needs to qualify in terms of the house payment they are comfortable with. Generally, the house payment will be about 1/3 of GROSS monthly income. For example, if monthly household income is $5000 a months—a house payment of $1650 (principal, interest, taxes, and insurance included) would be reasonable. The 2nd test is house payment plus other payments, for example, car, credit cards, etc. Monthly expenses, water, lights, insurance, phone, child care are not included in this calculation. For example of the house payment is $1650 and there is a $450 car payment plus credit card debt of $100 a month, is in a range that is acceptable. The 3rd test is called the residual income tests, which means VA requires a household has a certain of $’s AFTER all the debts are paid. That # is dependent on family size, geographic area of the country and square footage of the house. It is rarely a problem, just something that is particular to VA. Having said all of this, the veteran/soldier/reservist, still has to be comfortable with the house payment and how it fits into his budget. No one wants to see any borrower worrying about making the house payment every month.
VA has credit history criteria that the veteran/soldier/reservist must meet. VA has more flexibility than some of the other loan programs. Veterans, soldiers, and reservists should not be afraid to ask about their particular situation.
VA will finance stick built homes as well as manufactured homes. The manufactured homes have to be built after 7/1/76 and they must be a double wide. VA will consider water sources that are not city water, well, spring, etc. Again check with a credible VA lender to discuss particulars.
Our military personnel, active, veteran or reservist have earned this benefit and Stearns Lending and I are happy and proud to thank them for their service and help provide financing for a “Welcome Home”.