How To Use Your Va Loan

A va loan is a 0 down mortgage option issued by private lenders and partially backed or guaranteed by the department of veterans affairs va.

How to use your va loan. Work with the lender to complete a loan application and gather the needed documents such as pay stubs and bank statements. Using a va loan for second home is definitely possible under several circumstances as long as you meet certain requirements. Also in order to use the va loan as part of the construction to permanent process the builder must be registered with the va and offer a minimum one year warranty. 350 000 purchase price 310 400 entitlement cap 39 600 difference.

After one va loan is paid off the borrower s entitlement is restored and they can use the full amount of entitlement. Here s what the math looks like. Va s appraisal is not a home inspection or a guaranty of value. For this example 300 000 purchase you would need to come up with about 4 000 for a down payment because of your incomplete va loan entitlement.

Department of veterans affairs offers veterans and active duty military members a number of benefits including va home loans. 39 600 x 25 percent 9 900. No down payment as long as the sales price isn t higher than the home s appraised value the value set for the home after an expert reviews the property. Apply for your va loan.

You must obtain a letter of eligibility from the va before a lending institution can approve a va loan. When you use this benefit the home must be your primary residence which means va loans are generally not available for second homes unless you re moving. A va loan is a mortgage loan that s backed by the department of veterans affairs va for those who have served or are presently serving in the u s. This generally means borrowers cannot use a va loan to finance the purchase of a rental or investment property he says.

Better terms and interest rates than other loans from private banks mortgage companies or credit unions also called lenders. Eligible borrowers can use a va loan to purchase a property as their primary residence or refinance an existing mortgage. For starters you can only use a va loan to purchase or refinance your main residence parker says. While the va does not lend money for va loans it backs loans made by private lenders banks savings and loans or mortgage companies to veterans active military personnel and military spouses who qualify.

Military borrowers who want to refinance a home move out and rent it out to others have their best option using a va streamline refinance loan which does not require you to occupy the home as your primary residence but simply requires you to legally state you have used the home as your primary residence in the time leading up to the refinance loan. The lender orders a va appraisal and begins to process all the credit and income information. Just like a more traditional va loan there are limitations and restrictions.