The VA home loan program is one of the most flexible and attractive ways to finance a home today. There’s no set down payment requirement, no private mortgage insurance and rates are lower compared with some other types of loan programs. It’s also one of the most underutilized types of mortgages due to several common misconceptions.
For starters, you had to have been a member of the armed forces and discharged in any way other than dishonorable to be eligible (surviving spouses may also be eligible). However, many veterans don’t think they served recently enough or for long enough to qualify. Eligibility for a VA home loan is based on the length of time served, and the period in which you served. It is best to check the VA’s chart while considering your unique situation. However, the time required is less than you might think. Also, it doesn’t matter when you served. For instance, an Army veteran with at least 90 days in service around the time of the Vietnam War is likely eligible. Surviving spouses (that have not remarried) of prisoners of war, missing in action, or those who were killed while serving our country may be eligible.
Before you get your heart set on a home that is not obtainable with a VA loan, plan and find out what limitations the VA has for eligible properties. There are a few restrictions on the type of property that can be purchased with a VA loan and some that require extra consideration.
If you want to purchase a townhome or condominium, be sure it is part of a VA approved complex. This stipulation is the only added requirement from a single-family home, and you will want to check on this in advance to avoid trouble during the loan process later on.
If you want to use a VA loan for the purchase of a manufactured or modular home, it must be affixed to a permanent foundation. Manufactured homes also have additional requirements that must be met including square footage minimums and proof of sufficient facilities. Not planning for these requirements when obtaining a VA loan can cause many headaches and possibly even heartbreak when looking for a suitable property.
New construction loans require VA approval on the builders, plans, and site, as well as several inspections before the loan can be granted. Unfortunately, vacant lots and co-ops are not eligible through the VA loan program.
The good news is there are no special requirements related to single-family homes thus making it the easiest type of property to buy using a VA loan. Because there are no restrictions, it is also the most popular choice with most veterans.
Other people don’t realize that even if you don’t have a VA home loan currently, you may be able to refinance into a VA mortgage, provided you and the property are eligible.
Lastly, many veterans believe that they can only use a VA loan once; this is incorrect. There are stipulations to how much the VA will guarantee, but the benefit is reusable.