VA Loans

What is a VA Loan?

A VA loan is simply the best loan available, and with good reason.  Most lenders enjoy offering VA financing for qualified service members since this is a small way to be able to give back to those who served!  If you know you have VA entitlement, it is your responsibility to speak up and let your Colorado Loan Officer know!  Eligible veterans, National Guard, reserve members, active duty, and surviving spouses can qualify for this truly amazing benefit.    The highlights of VA loan consist of, but are not limited to, the following:

  • * NO down payment requirement – 100% of the home’s value may be financed, up to the county loan limit and assuming full entitlement
  • * Flexible credit requirements (Credit score down to 580, but in some cases a 620 or greater will be required)
  • * Flexible debt-to-income ratios
  • * NO monthly mortgage insurance
  • * VA loan may be used to Purchase or refinance a home. Cash-Out refinance up to 100% of your home’s value, or Streamline Refi (Interest Rate Reduction Refinance Loan/IRRRL) with limited documentation requirements.
  • * NO payment reserve requirement
  • * Closing costs may be paid for by the seller (up to 4% of the purchase price)
  • * NO first-time home buyer requirement
  • * VA eligibility may be used over and over. You can use your VA entitlement more than once!
  • * One time restoration available!
  • * No funding fee for disabled vets (must have filed for 10% or greater disability with VA)
  • * Can finance energy efficient improvements into the loan amount for purchases or refinances
  • * Extremely competitive interest rates. Very low compared with other loans on the market
  • VA 0% Down Payment and Funding Fee

    The VA loan is known for it’s 0% down payment and no monthly mortgage insurance.  In fact, there is no mortgage insurance of any kind on the VA loan.  There is, however, a funding fee charged by VA for these loans.  The guarantee fee is a percentage of your loan amount.  Depending on your loan-to-value ratio, whether or not you have used your VA entitlement before, loan purpose, and whether or not you are a 10% or greater disabled vet, the funding fee can range from 0% to 3.3% (current as of 7/18/16).  The funding fee is financed into the base loan amount, which prevents vets from bringing this amount to closing in the form of cash to close.  Essentially, if you had a $200,000 purchase price, and your funding fee was $4,300, your total loan amount with the funding fee would be $204,300.  The funding fee is discounted for the first-time use, but don’t let that hold you back from using your entitlement for “the dream house”.  You can actually reduce your subsequent use funding fee by applying a 5% down payment, or an even greater funding fee reduction with a 10% down payment.  Vets who have filed for a 10% or greater disability claim with VA qualify to have the funding fee WAIVED, over and over again.

    Poor credit?  No problem!

    Whether or not you have had a bankruptcy, foreclosure, short-sale, or otherwise in the past, VA is one of the loosest loan programs on the market when it comes to credit.  In fact, VA allows a home purchase 2 years after foreclosure, or 2 years after discharge of a chapter 7 bankruptcy.  Even if you foreclosed on a prior VA home loan, you may have additional “bonus entitlement” to qualify for another 0% down home purchase!  The main reason VA is so lenient when it comes to significant derogatory credit items, is due to the residual income calculation.  Basically, the residual income calculation is a separate calculation that is required only on VA loans.  The residual income takes into consideration how much a VA borrower pays in taxes, child-care, even maintenance on the house!  Thanks to the residual income calculation, VA loans are actually the lowest defaulting loan in America today!

    Jumbo Financing Available!

    Did you know you can use your VA entitlement to purchase a home that is over the county loan limit?  You can absolutely use a VA loan for a jumbo home loan purchase.  Assuming full entitlement, a vet can typically purchase up to purchase up to the county loan limit or a $576,000 purchase price (whichever is less) with no down payment.  Once over these limits, a down payment will start to be required.  The down payment is essentially 25% of the difference between the purchase price and the county loan limit.  This could save you ten’s of thousands of dollars at closing!

    Streamline Refi (IRRRL)

    The Interest Rate Reduction Refinance Loan or “IRRRL” as it’s commonly referred to in mortgage lending, is one of the easiest and most flexible refinance loans available.  The reason the IRRRL is called a streamline refinance, is due to the reduced documentation requirements.  In most cases, all you need is a photo ID, a copy of your mortgage Note and Deed of Trust, and you’re good to go!  There is NO APPRAISAL required for an IRRRL, and the funding fee is a lot less than other types of VA loans.  There is often NO income or asset documentation required whatsoever for the VA IRRRL.

    VA Cash-Out Refi

    The VA cash-out refi will enable you to draw out your equity, up to 100% of your home’s value!  This could be a great tool to help you start or finish up that home improvement project, payoff high-interest consumer debts, fund college savings, or anything else you can think of.  VA is the only loan available that allows 100% financing on a cash-out refinance.

    How To Get Started

    The very first step in the VA home buying process, always starts with pulling a copy of your Certificate of Eligibility, or “COE” as it’s known in the mortgage practice.  Veterans can request a copy of their COE directly from VA either online, through applying with their lender, or by mail.  If you don’t apply through your lender and decide to obtain your own COE, you may need to provide a copy of your discharge paperwork and complete your specified VA request form.  Once you have your certificate of eligibility in hand, you will need to reach out to your Colorado Loan Officer to complete your loan application for a VA home loan, and provide any required documentation.  Once your loan application is completed and documentation is provided, you will be ready to start your house hunt.

    VA Loans