VA Loan Requirements in Gainesville FL
The VA loan is almost always the best option for someone who has VA benefits. In general, you must be active duty and/or honorably discharged from a branch of the armed services to qualify for a VA loan. You may also qualify as the surviving spouse of a service member who was killed in the line of duty. VA loan requirements are considered to be lenient in comparison with other loan options: there is no down payment required, and the seller can contribute for closing costs. In addition, rates are excellent with no monthly mortgage insurance to add to the payment.
Obtaining Your Certificate of Eligibility
To obtain a VA loan you will first be required to obtain a current certificate of eligibility (COE). BEWARE: There are many places out on the internet that offer help obtain your COE for a fee, but that is not necessary. The easiest and quickest way to get your COE is FREE. Simply contact a Landmark Mortgage Professional and they can usually help you get your COE that same day. But, if you are actively looking at houses and you are planning to use a VA loan, don’t procrastinate. There are sometime issues obtaining your COE, especially if you have used it in the past.
*If you need to refinance a VA loan you can learn all about the VA Streamline Refi (IRRRL) here. If you are planning to purchase a home, read on…
What Specifically are the VA Loan Requirements?
No Money Down. You can purchase a home with a VA loan with very little money out of pocket, and without geographic or income restrictions like the $0 Down USDA Loan. In most cases, you will be required to place an earnest money deposit when you offer to purchase a home (the minimum in our area is usually $500-$1000). If coordinated properly with your realtor, your earnest money can typically be refunded at closing. It’s a good idea to meet with a Landmark Mortgage Planner for a pre-approval to learn how to structure your offer before you find a home.
Credit Score of 580, with NO open collections, and at least 3 trade lines.
Collections that are paid are not usually a problem and some open collections may be allowed or paid at closing with underwriter approval. Open, seasoned trade lines don’t necessarily have to be on your credit report, but can sometimes be alternative trade lines like electricity, car insurance or phone bills. These payments must be documented and paid on time to be useful. The buyer typically must have a 580 score under VA loan requirements.
Two Year Employment. When the veteran is no longer an active member of the military he must be able to document 2 years employment. This requirement can often be waived if a soldier is just returning from active duty, subject to underwriter approval.
Other Factors & Limitations
The maximum purchase price for a VA loan in the Gainesville area as of January 2020 is $510,400. These limits often change and any updates could be seen at the VA website. Purchase price can also increase with money down.
Because VA loans have no monthly mortgage insurance, the payment is typically lower than other options. However, VA loans do have a funding fee which is usually added to the purchase price. This funding fee is 2.3% for first time users of the program, and 3.6% for those who are using it additional times. The funding fee is waived for disabled Veterans, or unmarried surviving spouses of Veterans with a service related death.
VA loan requirements regarding seller concessions are usually more flexible than any other types of loans. The amount the seller can pay for closing costs like title work, underwriting fees, and processing, as well as other items associated with the closing like assessments, repairs, etc. is not limited. In addition, the seller is allowed to pay up to 4% of the purchase price for the following items:
- VA funding fee (if the buyer chooses not to finance)
- Prepaid Taxes and Insurance
- Discount points to buy down the interest rate
- Temporary buy down of the rate
- Payoff of credit cards, collections or judgments
- Gifts from the seller (like a television or appliance)
When coordinated properly with your mortgage planner and realtor, veterans can often negotiate a very attractive deal. Talk with your Landmark Mortgage Planner about your desire to eliminate any debt so that this can be structured properly on your offer to purchase. Regardless of whether you want to pay off debt or need the seller to help with closing costs, you will most likely need a pre-approval letter from a lender in Gainesville before you can make an offer to purchase a house. We’d love to help!