Meredith Medvec from Prosperity Home Mortgage answers commonly asked questions in regards to VA Financing. Meredith’s father-in-law, Dale Medvec, served in the US Navy for 30 years and retired to Jacksonville. Her family’s military background has fueled her passion for helping service members and their family understand all of the benefits to VA Financing.
What are the Advantages of VA Financing?
The main benefit to VA Financing is 0% down payment. There is no required down payment for the loan. Additionally there is no mortgage insurance premium. Typically, with a conventional loan, if you do not put 20% down, you have to pay a monthly mortgage insurance premium. With FHA financing, you put 3.5% down and have the mortgage insurance premium for the life of the loan (typically 30 years). For VA loans, there is truly no down payment and no mortgage insurance premiums.
How would a Service Member know if they qualify for a VA loan?
At Prosperity Home Mortgage, we typically order the member’s Certificate of Eligibility (COE). Typically we receive the COE back in 24 hours. You can go on the VA web site as well to request it yourself (www.VA.gov or 877-827-3702). The COE will show what the service member’s entitlement is and whether or not he or she is required to pay the VA funding fee. Basically, the COE lets us know he or she is eligible for VA Financing.
What is the VA Funding Fee?
The VA Funding Fee is a fee that gets added into the loan amount. For example, if you are financing $200,000, a percentage of that will be added into the loan amount as part of the one-time VA funding fee. It varies depending on your down payment. You can be exempt from the VA funding fee if you are more than 10% disabled with the VA. Your COE would indicate this disability. In 2020, now purple heart recipients are exempt from the VA Funding Fee regardless of disability.
What Loan Limits Exist for VA Financing?
Prior to 2020, VA loans followed the conforming loan limit. The conforming loan limit now is just over $510,000. Now in 2020, the VA loan limit is unlimited. Lenders are putting in their own cap (or limit). From lender to lender, it can vary. Properity Mortgage’s current loan cap is $2,000,000. That is going to be a rare $2 Million VA loan and we would typically take those on a case-by-case basis. From the VA’s perspective, there is no loan limit anymore.
How many VA Loans can a Person Have?
There is no limit to the number of times you can use your VA benefit. You can have more than one VA loan at a time actually – it is a common question. Most people believe you can only use it one time. That is not true. You can use your VA benefit over and over. As far as having more than one property at a time, we look at what your VA entitlement is. For example, if you already own a home in Georgia that you paid $150,000 and are now getting stationed in Florida and plan to purchase a $200,000 home, the lender would run a basic calculation to show how much VA entitlement you have left. If you go over your VA entitlement limit, then you may be required to put down a small down payment. However, it is still minimal compared to what it would be. VA loans are for primary residences. They are not intended to purchase investment properties. If you have a GA home and now are moving to Florida, you can keep that GA home. You can purchase in Florida as well – you just need to be in the correct amount for your entitlement to avoid the down payment. We can run it on a case-by-case scenario to show a VA buyer what they can purchase if they don’t want to put any more money down.
Does the VA have any Specific Property Requirements?
The VA has a much more thorough inspection process. A VA loan requires a clear Wood Destroying Organism (WDO) report before closing. You need to be aware of this when looking at homes. It will need to be remedied before closing as you cannot close without a clear WDO report. A VA appraiser also looks for safety concerns such as railings, uneven concrete, and other major safety issues or hazards. The VA has a limited number of licensed VA appraisers in the area and they will be very familiar with the property requirements.
Laura: With a recent VA buyer I worked with, we did have our first WDO inspection come back with issues. We negotiated with the seller to fix the items. Then the buyer re-did the inspection and sent the clear report to the lender. We closed on the property without any issues. There are ways to fix these extra requirements but you need to be aware going into it.
Why Choose Prosperity Home Mortgage?
We waive the origination fee and credit back the appraisal at closing. That averages about $1200 in savings for our VA buyers. We have been able to save over $6 Million in total fees for our VA buyers. We can also close VA loans in 21 days.
Click here to watch the previous VA video (shot in 2018)
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