VA Loan Houston
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What is a VA Loan?
A VA loan is a mortgage option that only veterans, service members, and some military spouses can claim. Since the U.S. Department of Veterans Affairs guarantees a portion of the loan, you are likely to receive better terms for your loan — such as low down payments.
However, you may be required to meet different standards compared to a traditional loan. Don’t worry though. We’re here to help walk you through the process.
How VA Home Loans Compare to Traditional Mortgages
If you qualify for VA loans Houston options, there is almost no other type of mortgage loan program that could offer you comparable benefits. To put this into better perspective, consider a comparison between VA loans and conventional loans.
If you choose a conventional loan, you can expect to put anywhere from 3% to 20% down for your loan. The down payment depends on your debt-to-income ratio, your credit score, the total loan amount, and the lender’s policies. Qualified borrowers can see VA loan down payments as low as 0%.
When it comes to fair mortgage company Houston lists, we are proud to say that Rock Mortgage makes the cut. We offer reasonable terms for our conventional loans. Even so, our VA loan Houston borrowers enjoy even lower interest rates. This reflects the fact that we experience less risk when the government backs a portion of the loan.
One of the main reasons people who seek conventional loans try to have at least a 20% down payment is to avoid private mortgage insurance. For the record, FHA home loans also require a type of mortgage insurance. However, VA loans require no mortgage insurance. Instead, there is a more affordable funding fee.
Serving your country is no easy job, but after overcoming this, qualification for the VA loan process becomes an easy process. In fact, service members find it much easier to qualify for a VA loan than conventional loans and other mortgage programs.
Your Guide to VA Home Loans
The VA Loan Process
1- VA Loan Preapproval
Going through a prequalification process is essential. It reveals whether or not you are eligible for a loan and how much you may qualify to obtain. It’s a non-binding step that can help you compare terms and rates.
2- House Hunt
Once you’re preapproved, you can search for the ideal home. Most VA loans can cover just over $480,000, so keep that in mind during your search.
3- Contract Negotiation
Once you find the ideal home, you need to get it under contract. You do this by working with your agent to create and sign a purchase agreement. Before this step, you should strongly consider having the house appraised and inspected.
4- VA Loan Underwriting
Underwriting services include the final review of your loan file. An underwriter carefully assesses your finances to determine how much risk the lender will take by granting you a loan.
5- Loan Closing
Closing the loan is the final step of the VA loan process. You’ll sign the last set of binding documents at this point in the process. The home is yours at the end of the closing process!
Eligibility Requirements for VA Loans
1- Loan Certificate of Eligibility
You’ll need to provide proof of your service if you want to get a VA loan. A Certificate of Eligibility (COE) shows lenders that you meet VA loan service requirements.
2- Documents Needed to Obtain a COE
You need certain documents to claim your COE. These include:
- A copy of your separation or discharge papers if you’re a veteran
- A signed statement of service signed by your personnel officer, commander, or adjutant if you’re an active-duty service member.
3- How Spouses Can Obtain a COE
If you’ve become a surviving spouse of a veteran, you’ll need to acquire the discharge documents of your veteran, if possible. You’ll also need to request, fill out, and submit VA Form 26-1817.
If you’re not receiving DIC benefits and need to obtain a COE, prepare the following:
- A copy of your marriage license
- A completed DIC, Death Pension and/or Accrued Benefits form
- A death certificate
4- Additional VA Loan Eligibility Requirements
- You must be currently on active duty or honorably discharged.
- You must have at least six years of service in the Selective Reserve or National Guard.
- You must have a minimum of 181 days of consecutive active service during peacetime,
- OR90 days of continuous active service during wartime.
5- VA Loan Income and Credit Requirements
- You must be able to afford the home you’re financing.
- You must have a full-time income (at least 30 hours per week).
- If you have part-time income, you must have at least a two-year history of working part-time with a likelihood that you will continue.
- You must have a qualifying debt to income ratio.
- You must meet the lender’s minimum credit score requirements.
First Time Home Buyers in Houston May Not Need a Significant Down Payment
A down payment of 20%, or one-fifth of the total purchase price, is often recommended as appropriate for first-time home buyers. Even with Houston home prices being below the national average, this can be an unattainable goal. The good news is, in most cases, a 20% down payment is not necessary to secure a mortgage. Depending on the loan you choose, you may only need to make a down payment of up to 3.5%. With some mortgage products, there is no down payment required at all.
While this makes mortgages much more attainable for people of modest means, there is a tradeoff involved. First-time home buyers Houston who make a low down payment typically have to pay mortgage insurance as part of their monthly mortgage payment. This is separate from the homeowner's
policy that you have to obtain to secure your mortgage, protecting you from damage to your property. You must factor both the mortgage insurance and the homeowner's insurance premium into your monthly mortgage payment when determining whether you can afford it.
Frequently Asked Questions About VA Loans
What Are the Two Main Types of VA Home Loans?
The U.S. Department of Veteran Affairs provides four different VA loan programs that fall under two broad headers: VA direct loans and VA-backed loans. There is currently only one program for VA direct loans, but there are three for VA-backed loans.
With a VA direct home loan, the VA becomes the mortgage lender, instead of a private entity. This program is known as the Native American Direct Loan. As the name implies, it is only available to Native American veterans and their spouses.
Because very few veterans can qualify for that program, most turn to VA-backed home loans. The three available programs include purchase loans, cash-out refinance loans, and interest rate reduction refinance loans. For all of these loans, Rock Mortgage becomes your lender.
Are There Any Restrictions for VA Loans?
We highly recommend VA loans Houston to all qualifying borrowers and for all qualifying properties. However, it’s important to note that borrowers can only use a VA loan to pay for a primary dwelling. The same is true of all other government-backed loans.
If you need a home loan to purchase a vacation home or investment property, you may need to rely on a conventional loan. Note that required down payments and interest rates are higher for second homes and investment properties because the risk of default tends to be higher.
The good news is that if you pay off the original loan, you can keep the property as a secondary home. You can then use another VA loan to purchase your next primary residence.