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History:

On this Memorial Day Weekend, we honor the men and women of
the United States who put everything on the line to protect our country and the
freedom we hold. In 1944, President Franklin D. Roosevelt signed the VA loan
into law helping Veterans achieve the American dream. In 1970, under President
Nixon, the VA loan landscape changed with the Veterans Housing Act of 1970. There
was no longer a time limit on loan eligibility, and veterans now had the option
to refinance into another VA loan. Today, the VA loan has guaranteed more than
24 million homes across the United States.

VA Home Loan Military and Service Requirements:

With a VA loan, there are service requirements that need to be
met in order to qualify. These are based on the time period during which you
served, and the number of days active duty. For example, if you are currently
active duty, you would have had to of served 90 continuous days to meet the
requirements. For a further breakdown, those who served during:

• WWII – a total of 90 days, or less than 90 days if you were discharged for a service-connected disability
• Post-WWII – 181 continuous days or less than 181 days if you were discharged for a service-connected disability
• Korean War – a total of 90 days, or less than 90 days if you were discharged for a service-connected disability
• Post-Korean War – 181 continuous days or less than 181 days if you were discharged for a service-connected disability
• Vietnam War – a total of 90 days, or less than 90 days if you were discharged for a service-connected disability
• Post-Vietnam War – 181 continuous days or less than 181 days if you were discharged for a service-connected disability
• 1980-1990 – 24 continuous month or 181 days that you were called into active duty
• Gulf War – 24 continuous months or 90 days in active duty, at least 90 days if you were discharged for a hardship, a reduction in force, or convenience of the government or less than 90 days if you were discharged for service-connected disability

If you separated from service after September 7, 1980 – 24 continuous months, 181 days of active duty or less if discharged for hardship, a reduction in force, convenience of the government or a service-connected disability

On Memorial Day, we honor those who have given their lives for
our freedom. For those who have a spouse serving or who has served, you may be
able to qualify for a VA loan through a Certificate of Eligibility. However,
there are requirements that you will need to meet as well. Most, COE’s are
given to those surviving spouses of a Veteran or the spouse of a Veteran who is
missing in action (MIA) or being held as a prisoner of war (POW).

However, you meet these requirements, be sure to talk to your Total Mortgage Loan Officer about
your options to be able to receive a Certificate of Eligibility (COE).

Credit Score Requirements for VA Home Loans:

VA loan credit score requirements are similar to USDA
credit score requirements. The Veterans Administration or the VA
doesn’t set a minimum credit score requirement, however, the lender is able to
set a benchmark. Typically, the benchmark for a VA loan is set at a 620 FICO
score. This does not mean that you will not be approved with a lower score.
Your credit score eligibility will be determined once a credit report and
analysis are complete. No matter your credit score, there is always room for
improvement.

VA Home Loan Down Payment Requirements:

Another advantage of a VA loan is the down payment, or lack
thereof. Once again, similar to USDA loans, VA loans don’t require a down
payment from borrowers. In fact, about 90% of VA loan holders borrow the loan
without a down payment placed on the loan, although when a down payment is
made, the VA Funding Fee decreases.

A VA Funding Fee on a first-time VA borrower is typically 2.3%
of the loan when no down payment is made. When a down payment of 5% is made by
the borrower, the fee drops to 1.65% of the loan. As the down payment amount
increases, the VA Funding Fee decreases.

The down payment on a VA loan does not have to come from your
accounts. It is acceptable for a down payment gift to be given on a VA loan. If
the down payment is a gift, a letter is required and needs to have the donor’s
information, relationship to the borrower, details about the gift, and legal
phrasing that states that the payment does not need to be repaid.

What are my options:

Depending on your credit score and where you would like to
live, you have more options available to you. Here are some of the most
noteworthy loan options:

VA Loans – Are serving and meet the requirements? Is your spouse a Veteran or MIA or POW?

• Benefits:
  • No down payment requirement
  • No credit score requirement, lender may set one

USDA Loan – Are looking to live in a rural or suburban area?

• Benefits:
  • No down payment requirement
  • No credit score requirement, lender may set one

FHA Loan – Are a first-time home buyer with a credit score that is in repair?

• Benefits:
  • 3.5% down payment minimum, PMI for the life of the
    loan
  • Lower credit score requirements set by lenders

Conventional 97 Loan – Are you a first-time home buyer who has a good to excellent credit score?

• Benefits:
  • 3% down payment minimum, 20% down payment without
    PMI on the loan 

Summary:

            Mortgages are
not a “one size fits all” financial decision. VA loans offer Veterans a great
option to achieve the American Dream with no down payment required and no
credit score requirement set by the VA. However, to find the best loan for you
and your financial situation, contact a Total Mortgage Loan Officer or visit
our
mortgage builder today!

Sources:

https://www.veteransunited.com/valoans/seven-decades-success-history-va-home-loan/

https://www.va.gov/housing-assistance/home-loans/eligibility/

https://www.valoans.com/eligibility/credit/

https://www.valoans.com/articles/va-loan-down-payment-facts/

https://www.totalmortgage.com/my-mortgage/builder#/

Source: totalmortgage.com