The VA loan requirements for 2015 determine a borrower?s ability to pay as well as the lender?s ability to offer a loan. It is important to know the restrictions concerning VA loans. Knowledge of these restrictions will allow the borrower to make more informed and beneficial financial decisions.
Basic requirements for VA loans
As with any loan or mortgage, there are basic factors that determine eligibility for VA loans. These include credit history and debt to income (DTI) and loan to value (LTV) ratios. Credit score and history determine a borrower?s ability to repay based on past history. DTI ratios will determine the amount of payment the borrower can afford. LTV ratios determine the amount that can be borrowed against the value of the property.
VA certificate of eligibility
The VA certificate of eligibility is required for all VA loans. It is the first step when applying for a VA loan and can be ordered from the VA.
Credit score and history specifics
VA loans are made through public financial institutions but are insured by the VA. Consequently, the VA does not require a minimum credit score, but lenders have requirements in addition to those of the VA. Most lenders may require a minimum score of 620. Many lenders also require at least two lines of credit that have been maintained for at least two years.
Lack of credit history may not be considered a limiting factor for VA loans. It is necessary, though, to establish a two year history of income, residence and assets. It is wise to consult your credit report to ensure the previous factors are present.
Late payments and other credit discrepancies
VA loans require that there is no more than one late payment of thirty days or more. They also require that all accounts in collection must be paid. All bankruptcies must be satisfied at least two years before applying for the loan.
Federal debt such as student loans must be up to date. Any judgments must be at least 12 months old. Foreclosures with no loss of security must be completed 12 months prior to the loan application. It there was a loss of security, the borrower will be ineligible for VA loans for 36 months.
Any child support obligations must be current. If past due obligations are satisfied through an agreement with the presiding court and payments have been made satisfactorily, the borrower is not required to pay the past due amount in full. Both the past due payments and regular payments will be included in the borrower?s income to debt ratio.
Other Important facts about VA loans for 2015
VA loans require no minimum down payment. They are one of the few loan types that offer 100% financing with no down payment.
VA loans require the borrower establish a primary residence in the property financed. They do not allow for investment properties or second residences. Also, the loans do not allow for a co-borrower who does not reside at the financed property.
A veteran applying for a VA loan is not required to have income in certain situations. If the co-borrower establishes sufficient income to cover the mortgage and other debts, they will be considered eligible.