VA Home Loans

The following are highlights of this program:

Down payment requirements:  Since this mortgage is guaranteed  by VA, the minimum down payment required is 0% of the sales price.  Veterans are allowed to put money down on the purchase (which subsequently reduces the required funding fee).  No cash reserves are required.

Income and employment:  There are no limitations placed upon income requirements.  As for employment, there are no limitations on a specific length of time at a particular job.  However, a 2 year history is required, preferably in the same line of work (education can be counted towards this 2 year history if it is for the same profession the borrower is currently in).

Eligible properties and occupancy requirements:  VA home loans are restricted to single family residences that are new, under construction, or existing (i.e. resale properties), condominiums, and townhomes.  Homes located in a PUD (planned urban development) must be approved by VA.  Also, mobile homes with a permanent foundation, taxed as real property, and built after June 16, 1976 are eligible.  All VA guaranteed properties must be owner-occupied and located in the United States. 

Closing Costs:  VA has created a list of allowable and non-allowable closing costs that may be charged to the home buyer.  Non-allowable closing costs generally are referred to as "garbage fees" or "junk fees" and include costs such as the lender's tax service or document preparation fees.  

Qualifying ratios:  VA does not limit a borrower's monthly payment as in the case of many mortgage loan programs.  However, a borrower's total debt (proposed monthly payment plus monthly payments towards credit cards, student loans, car payments, and other installment and revolving credit) cannot exceed 41% of their gross monthly income.

Mortgage Insurance Premium:  VA home loans do not have mortgage insurance premiums.  However, the VA does require a funding fee assessed with each VA loan (unless you are a qualifying disabled veteran).