As we come off the Memorial Day Holiday, created to recognize and remember those who died serving our country, we at Orion felt that it was a good time for a refresher on Orion’s Veteran’s Administration (VA) loan program. These home loans for veterans are available to active military, retired military, and disabled military members and their families.
With the VA program, 100% equity cash-out is available on refinancing. There are no monthly mortgage insurance premiums, and these loans typically have lower interest rates and monthly payments than conventional loans. No appraisal is required for many VA loan refinancing transactions, nor is there a down payment required depending on price and location and as long as the purchase price doesn’t exceed the home’s value. Closing costs are capped, and minimum credit scores are often less than other programs.
Taking a step back, how does it work? The Department of Veterans Affairs, aka VA, guarantees of portion of home loans for eligible veterans. This guarantee results in lenders being able to fund mortgages with more favorable terms and qualifying than those for conventional or other mortgages. To be eligible a veteran must meet certain requirements that include length of service, duty statusand “character of service.” Essentially, most veterans who have received an honorable discharge, or active military or military reserve, likely have VA eligibility.
VA loans may only be used to purchase a primary residence the veteran must move into within 60-days. The VA program uses the same maximum county loan limits as those for conforming loans, $647,200 for the all counties, up to $970,800 for “high-costcounties.” VA loans have a funding fee that is added to the loan amount. The mount of the funding fee ranges from 1.4% to 3.6% of the loan amount depending on purpose of loan, if veteran has used their VA eligibility before, and loan to value. Veterans with a disability rating higher than 10%, recipients of the Purple Heart, and surviving spouses of veterans who died in the line of duty are exempt from the funding fee.
Income qualifying is easier for a VA loan at Orion vis-à-vis conforming mortgages asdebt-to-income ratios are not used. VA loans qualify with “residual income,”how much money your client has left each month after making their new house payment plus other obligations.
We value all of our brokers and your clients, and Orion’s Account Executives excel at finding the right program for your client regardless of military status. The VA program is just one of many options that we have!