by Anthony Kellum
In the early years of the U.S. Department of Veterans Affairs (VA) program, only active-duty service members and returning vets were eligible for a VA loan. But now, the VA has extended the program to include servicemembers of the National Guard and the Army Reserve, surviving spouses, and some cadets. The VA program was meant to foster homeownership but has failed due to the dissemination of misleading and incorrect information. The myths and misconceptions surrounding veterans’ eligibility for the program after receiving their first VA loan don’t seem to go away, causing some veterans to miss out on the opportunity to become homeowners. The passing of outdated information from past beneficiaries is another concerning issue. This article seeks to equip you with the latest guidelines from VA regarding your eligibility and options regarding the VA loan program.
What is the maximum number of VA loans you can have?
The VA program is structured to take care of eligible candidates for life. That is why there are no maximum or minimum limits on the number of times a veteran can use the program. It is possible to have more than one VA loan at a time. The Department of Veterans Affairs is not the lender. Banks, mortgage companies and other financial institutions provide the loans for which the department acts as a guarantor.
Taking over a VA loan
A veteran can transfer a VA loan to another person as long as the lender allows it. Taking over another VA loan is known as a loan assumption. The lender must first determine whether the other person meets their VA loan requirements before proceeding with the assumption process. The most significant advantage of the loan assumption is that not only veterans and active service members can assume the loan, but also anyone deemed qualified by the lender. Note, not all lenders allow loan assumptions. Therefore, if in such a situation, you should consider transferring the mortgage to the qualifying person while consulting with the lender.
VA loan entitlement
Every VA member who has met the service requirements has a VA loan entitlement. The VA loan entitlement is the specific amount the Department of Veterans Affairs would have to repay a lender if a VA member defaults on their loan. This kind of protection is called the VA loan guarantee. Depending on their eligibility, veterans may access a single level or both levels of entitlement. Levels include the basic and secondary tiers. For the basic level, VA members have a $36,000 entitlement and an additional $125,800 for those who qualify for the second tier. Altogether, a veteran could have an entitle ment of $161,800.
Keeping you home and getting a new one
The second-tier entitlement allows you to maintain your current house and buy a new primary residence. You must have enough income and entitlement to qualify for this.
Permanent change of station orders
An officer can be assigned in an area that would require their relocation, perhaps due to the duration of the assignment or distance. An officer may need to take another VA mortgage loan in such an instance.
Is it possible to get a VA loan after a foreclosure?
As much as a foreclosure would be considered damning, it doesn’t mean that you have lost your ability to get another VA loan. The only issue is that you may have a reduced VA loan entitlement, given that the Department of Veterans Affairs suffered a loss on loan. Following the foreclosure, a veteran will have to undergo the foreclosure waiting period now (usually two years). Even then, the waiting period could increase to more than three years if the foreclosure resulted from another government-backed product like a USDA loan. Lastly, even after the two-year waiting period following a foreclosure, borrowers must still meet the lenders’ credit requirements to qualify for a loan. For instance, lenders must determine how much entitlement may be left.
If you are eligible, a VA loan is a great option. VA hasn’t established a DTI (debt-to-income) ration limit, but most lenders will take a closer look at borrowers with higher ratios. VA doesn’t have a minimum credit score; however, lenders are allowed to set their own minimums typically a 580 FICO. You can purchase a home with no down payment, a higher debt-to-income ratio, and no private mortgage insurance.
That’s awesome!
About Post Author
