How to Get a VA Loan to Build, Buy, or Refinance

If you qualify for a VA home loan, then you have some amazing options to build a home, purchase a house, or refinance to lower payments or receive cash. Many want to know how to get a VA loan plus how to meet VA loan requirements. In order to explore all of your options, talk to someone that knows how to use VA guidelines to your benefit. Learn the basics to the little known tips to get you into the right home and VA mortgage. Additionally, learn these unique benefits from a VA home loan specialist who thinks “outside the box” to find solutions for you!

VA home loan
VA Loans are the Best Home Loan in America

Top 20 VA Home Loan Eligibility Tips

  1. VA construction loans
  2. Buying a farm residence with acreage using VA loans
  3. Buying a home in another state
  4. No money down up to any loan amount
  5. Multiple VA loans at once
  6. Waive VA funding fee
  7. Manual underwrite VA loan
  8. Use VA sales concessions to your advantage – pay off debts and more buying a home!
  9. Specialty properties: manufactured, condo, modular, log home
  10. Cash out refinance up to 90% of value
  11. Relocating / PCS and getting a VA home loan
  12. Converting a residence to a rental and using rent to qualify
  13. Student loan VA rules for deferred and income based debt
  14. VA credit score requirements
  15. Buying after foreclosure, short sale, or bankruptcy
  16. Property tax exemption or discount
  17. Renovation up to 100% of completed value (NC, SC, VA, MD only)
  18. Surviving spouse VA loan eligibility
  19. VA home loan debt to income ratio
  20. Becoming a VA approved builder

How Do I Get a VA Construction Loan?

Have you been told that getting a no money down VA construction loan is impossible? Regretfully, many have been told that a construction loan with a down payment is required. Ours is different in that we combine a no down payment construction loan with VA home loan. If buying land and building a house, both may be included in the construction loan at 100%. If building on own land, the land equity may be used to cover closing costs or reimburse funds. It all starts with choosing a VA approved builder and talking to a loan officer with VA construction loan experience.

Is There an Acreage Limit on VA Loans?

Actually, there is no acreage limit for VA home loans. So, buying a farm residence with excess acreage is possible with no down payment. Now that VA eligible borrowers with full entitlement can buy with no VA loan limits, buying a large property is easier than ever. Other than borrower qualification, the key is that the VA appraisal must have similar sold comparables. Therefore a property with 50 acres needs to have sales with similar (but not exactly the same) acreage to support the value. Learn more about living in the country using affordable VA home loans in this article.

Can I Use My VA Home Loan to Buy Out of State?

It is customary for a service member to stay away from home for extended periods. Even a PCS to another base while the family lives elsewhere is possible. Furthermore, a Veteran may live and work out of state away from the family. Often, a VA home loan provides the solution for split families living separately from each other. In these cases the Veteran or the spouse could satisfy the occupancy requirement. Thus, both do not have to occupy the home. Learn more solutions and success stories in our popular VA out of state article.

No More VA Home Loan Limits

Buying or building higher priced homes is now easier than ever! VA eligible borrowers with full entitlement by closing are able to borrow 100% of the purchase price. For most of the U.S. the conforming loan limit is $510,400, but VA home loans have NO LIMIT! Imagine buying or building a home with no down payment up to any loan amount. Removing the loan limits also helps those looking to refinance. VA cash out loans allow up to 90% of the appraised value. So, refinancing a jumbo loan into a VA loan could provide benefits. In addition to lowering the interest rate, receiving cash out for consolidation or improvements is possible.

Can I Have Two VA Loans at Once?

Yes, it is possible to have two VA loans at once. Whether the basic entitlement is tied up by a previous VA foreclosure or short sale as well as a VA loan on another residence, using VA home loans again is possible. This is called using bonus entitlement to use VA eligibility again. Furthermore, VA eligible borrowers may even count rent on a departing residence to buy another home with VA financing. Results are an easier qualification. When having two VA loans at once, the new minimum loan must meet or exceed $144,000. Using bonus entitlement means there is a limit to 100% VA financing and your expert VA loan officer will calculate the potential down payment for you.

Can a VA Funding Fee be Waived?

Now more than ever, waiving the VA funding fee is possible. Funding fee exemption combined with no monthly mortgage insurance makes VA tough to beat. In order to waive the funding fee for 2020 or after, the Veteran must have 10% or more VA disability or be a purple heart recipient. Additionally, a surviving spouse of a deceased Veteran may be exempt from the VA funding fee. Not sure if you can waive the VA funding fee? Let us check for you and qualify you for a VA home loan.

What is VA Manual Underwriting

Usually, mortgage lenders try to receive an automated underwriting approval first. Yet, not all loan scenarios get an automated approval. So, it is possible to receive an approval through VA manual underwriting. Although the guidelines are more strict, it is still very possible for VA loan approval. Even loan approvals are possible with debt to income ratios up to 50% and credit scores down to 580 are possible. Compensating factors help offset risks and improve chances of loan approval.

How Much Are Seller Concessions on VA Loans

VA loans will lend up to 100% of a home’s purchase price. Although, there is the common misconception that buyer closing costs are automatically included in a VA loan. This is not true. The most successful way to finance closing costs is to include seller paid costs for the buyer in the sales contract. Therefore, the buyer’s cash to close is reduced. VA loans allow all reasonable closing costs to be paid by the seller. Additionally, there is a huge VA advantage in something called VA sales concessions.

The maximum VA sales concessions are limited to 4% of the purchase price. Sales concessions may be used for about anything else above closing costs. Examples of allowed VA sales concessions include..

  • First year of homeowners and flood insurance
  • Escrow setup
  • Interim interest
  • Additional discount points to buy down the rate
  • Pay off Veteran’s debts
  • Buy out a lease
  • Purchase a golf cart, vacation, etc for the Veteran
  • Home repairs not required by the VA appraisal

Using a VA Loan to Buy a Condo, Manufactured, Modular, or Log Home

VA loans are not just for regular stick built homes. Other property types include condos, manufactured homes like a doublewide, onframe and off frame modular, log homes, and townhomes. Not all VA lenders will provide financing for all types, so make sure to ask. In order to use VA for buying a condo, it must be on the VA approved list. Manufactured homes must meet VA foundation requirements. Otherwise, any property must meet minimum property condition requirements.

Does VA Allow a Cash Out Refinance?

VA loans are not just allowed for buying or building a home. There is also a refinance option to lower a homeowner’s interest rate called an Interest Rate Reduction Refinance Loan (IRRRL). Furthermore, VA loans do allow a refinance up to 90% of the appraised value to be used as a cash out loan. Meaning the first mortgage may be paid off along with additional funds for paying off other debts, home improvements, or just cash in hand. Benefits include lowering payments, low interest rate, and no monthly mortgage insurance even though over 80% of the value.

Do You Need PCS Orders for a VA Loan?

Part of the military life is moving. Often from one military base to another, which is called a permanent change of duty station. PCS for short. Fortunately, VA loans make it easier to buy a home in a relocation. Foremost, provide your PCS orders to your loan officer. Next, either selling or renting out the current home may be necessary to qualify for the new home. Selling the home makes it easier, but VA loans are very flexible for the military buyer to keep the home as well. There are two options which include getting a rental agreement or getting proof of how much the home would rent for. This can be obtained by a local Realtor providing a market analysis on the home.

Can I Turn My VA Loan Home Into a Rental?

Like mentioned above during a PCS or just moving because you want to, renting out a home with a VA loan is an excellent option. VA loans will allow the full rental income from an executed lease to offset the mortgage payment. Although, the rental income is capped by the amount of the total mortgage payment and HOA dues (if applicable). Meaning no additional rental income may be used. Another option allows for receiving a market rent analysis from a Realtor. The same principle is applied as mentioned above except no lease is required.

Can You Get a VA Loan With Student Loans?

These days student loan debt is a reality for many including young and old. Not all mortgage loan guidelines recognize the student loan payment structures. Meaning that deferred or income based repayment student loans may require 1% of the balance included in a debt to income calculation. Although, VA loans help out in these areas. If a student loan is deferred over 1 year from closing, it can be excluded in the debt ratio. If deferred less than 1 year or is not fixed, VA has a calculation that is much better than 1% of the balance. Check out how VA loans treat these student loans here.

What Are the VA Home Loan Credit Score Requirements?

The higher the credit score, the better chance of loan approval. Even though VA loans lend 100% of the price or appraised value, perfect credit is not required. Actually, VA home loans are very forgiving when it comes to its credit score requirements. Additionally, it is possible to have charged off accounts, collections, or late payments. Potentially, leaving collections and charge off accounts unpaid is possible. If such credit issues exist, it is helpful to provide a detailed explanation letter and compensating factors. These could outweigh or override the credit issues.

When Can I Get a VA Loan After Foreclosure, Bankruptcy, or Short Sale?

Every once in a while, bad things happen to good people. Whether credit issues result from financial mismanagement or other circumstances, VA home loan guidelines are very forgiving. So, how long after a foreclosure, short sale, or bankruptcy can you get a VA loan?

  • Foreclosure seasoning = 2 years, 1 year if proven out of borrower’s control
  • Short sale seasoning = Same as foreclosure, but if not lates prior to short sale then no seasoning required
  • Bankruptcy waiting period = Chapter 7 seasoning is 2 years from discharge date. Chapter 13 seasoning is at least 12 months from filing

A key VA home loan requirement after major credit events like these is re-established credit. Therefore, showing on-time rent and other credit references may show recovery from a foreclosure, short sale, or bankruptcy.

Disabled Veteran Property Tax Exemption

Many states allow Veterans with a service connected disability to be exempt from property taxes. Usually, 100% disability is required for free property taxes. On a purchase, the Veteran must first buy the house with property taxes. Once an owner, the property tax exemption may be applied for. If a Veteran is not 100% disabled, still check with your county tax office for other programs. There are other ways for property tax discounts or exemption such as senior citizens, low income, other disability, and more.

Can You Get a VA Renovation Loan?

Whether buying or refinancing a home in need of repairs or home improvements, VA eligible borrowers could use a VA construction loan. Currently offered in NC, SC, VA, and MD, our VA construction loans could finance renovations up to 100% of the as completed appraised value. Benefits include up to 12 month construction period, interest only payments during construction, and all the other VA loan benefits.

Is a Surviving Spouse VA Eligible?

In certain cases, spouses of a service member or military Veteran may receive the same VA loan benefits. If the surviving spouse has not used VA before, it is important to first determine eligibility. We are happy to facilitate this process for the surviving spouse. Start with providing the DD214 or DD1300 which VA requires to determine the eligibility. It is even possible for a surviving spouse to qualify for VA funding fee exemption. If the spouse does not qualify for a VA loan, there are other wonderful loan options such as USDA, FHA, conventional loans, as well as down payment assistance.

What is the Debt to Income Ratio for a VA Loan?

Like other areas, VA loans are flexible when it comes to the maximum debt to income ratio. Debt to income ratio is calculated by dividing the total monthly debt payments divided by the gross monthly income. Typically VA debt ratios may exceed 50%, although it depends on the individual borrower’s scenario. VA manual underwriting guidelines are more strict. Another key area for VA loan qualification is residual income. Residual income takes the gross monthly income and subtracts monthly debts. These debts include debt payments, the new house payment, child support, alimony, utilities calculation, income taxes, childcare expenses, and more.

When it comes to qualifying for a VA loan, both the residual income and debt to income ratio are very important. Higher credit scores and other compensating factors make it easier to qualify with higher debt ratios.

How Do I Get a VA Builder ID?

In order to use a VA loan to purchase new construction, the builder must have a VA builder ID. Fortunately, there is not a test. But, there are a few forms the builder needs to complete and submit to VA. Generally, the VA builder ID number is approved within a few days. By clicking on the button below, we provide detailed instructions for how to become a VA approved builder. This includes the forms required. If you’re a builder in NC, SC, VA, or MD looking to build more homes for Veterans, let’s have a discussion about our no down payment VA construction loans too.

Hopefully, this comprehensive article has provided the basics on VA loans and how it may benefit many. Not only do these areas benefit VA eligible borrowers, it also helps sellers, Realtors, and builders. If you have questions, we can provide the answers. Contact us to start the VA loan process to build, purchase, or refinance your home.

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Written By: Russell Smith

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