VA Approved Lender USAVA | NMLS ID 966439 | MB 0921703
Mar
15 2016

5 considerations when choosing a VA loan


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USAVA is committed to helping active duty military and veterans make the best loan choices possible. Here are 5 considerations to help you navigate the VA Loan process to get the most for your dollar.

1. Documents required

Considerations

The following documents are all required in order to get the approval process started. A veteran should ensure he or she is able to gather them before visiting a VA lender.

2. Establishing VA eligibility

Considerations

The length of service or service commitment, duty status and character of service determine your eligibility for VA loans.

More eligibility requirements here.

3. Your Credit score

 

The Department of Veterans Affairs does not have a set credit score applicants must meet to be approved for a home loan. The VA only guarantees a portion of each loan in case of default. VA approved lenders like USAVA will take a credit score into account for approval, but will not base a decision solely on a credit report.

Lenders take a look at FICO scores to determine the risk of the loan going into default. FICO scores focus on the last two years and are broken down into five categories.

A FICO score is determined by assessing the following:
-payment history (35 percent)
-account balances (30 percent)
-credit length (15 percent)
-credit types (10 percent)
-credit inquiries (10 percent)

Most importantly, a credit score helps lenders ensure that a borrower is not given a loan he or she can not afford to pay back.

Low or poor credit scores can be improved by:
-keeping up with payments
-paying back any creditors
-not applying for anymore credit
-maintaining all credit card balances below

4. Loan limits

Considerations
VA home loans can be used to:

Loan limits are set amounts a qualified Veteran with full entitlement may borrow without a down payment. The VA does have a set limited liability amount which affects the amount of money it lends per person. The basic entitlement for each eligible veteran is $36,000 and USAVA will lend 4 times this amount with no down payment as long as the Veteran receives an approved Certificate of Eligibility (COE).

page-banner-35. Funding Fee costs

 

The VA funding fee is a percentage of the loan that varies depending on the loan type and military category. The funding fee is applied to any VA loan, including an IRRL.
Borrowers have two options:

OR

* would be entitled to receive compensation for a service-connected disability if member did not receive retirement or active duty pay, OR
* a surviving spouse of a Veteran who died in service or from a service-connected disability. Regular military members pay a 2.15 percent fee while Reserves and National Guard members pay 2.4 percent.

Find a copy of funding fee guidelines here.

Keeping these considerations in mind may help a veteran determine if he or she is ready for a VA loan and guarantee a smoother, faster process.