VA Home Loan in Pennsylvania - Get the facts!

Animated US flagFor qualified veterans, the VA loan is a great mortgage option. The following are a few of the advantages of a VA home loan:

  • There is no down payment requirement as long as the purchase price doesn't exceed the appraised value and conforms to the lending limits established by the lender.
  • No private mortgage insurance premium (PMI or MIP) is required on VA home-loans.
  • The Veteran's Administration limits the amount the lender can charge the vet for closing-costs.
  • All reasonable and customary closing-costs may be paid by the seller. The lender is prohibited from charging the veteran a penalty fee if the veteran pays the loan off early.

    . . . and, there is no First Time Home Buyer requirement with VA loans. The VA home purchase benefit may be re-used.

A VA loan is a mortgage loan that is insured by the Department of Veterans Affairs of the United States (VA). The VA does not create or lend money to veterans; rather, it backs loans provided by commercial lenders such as banks, savings and loan organizations, or mortgage firms. The Veteran's Administration guarantees the loan to the lender, not the veteran. This implies that if the VA loan defaults and the lender forecloses, the VA will pay the lender a portion of the mortgage. The reimbursement amount varies depending on the loan size, but in general, the guarantee is 25% of the outstanding sum.

The VA does not promise that the home, whether new or previously occupied, will be free of problems. Furthermore, the assurance does not imply that qualified veterans will be guaranteed a mortgage. To receive VA funding, VA lenders must adhere to the Veteran's Administration's underwriting standards. Before providing VA home loans, VA lenders must be authorized by the VA.

A financing fee paid to the borrower makes the VA guarantee feasible.
Except for veterans who are certified as 10% handicapped by the VA, every VA borrower must pay the financing fee. The guarantee reimbursement is funded by the funding fee.  See funding fee calculation

Who is eligible for a VA loan?

In general . . .
You have completed 181 days of active duty in peacetime.
OR
You have completed 90 consecutive days of active duty during a period of war.
OR
You have served in the National Guard or Reserves for more than six years.
OR
You are the spouse of a military person who died in the line of duty or became disabled as a consequence of service.

See more information about veteran eligibility

How much can a veteran borrow?

The VA has no set lending limitations; nevertheless, VA lenders will adhere to a formula to ensure that the loan satisfies the VA's 25 percent guarantee.
The lender limit is consistent with the VA's single-family loan ceiling, which is published yearly by the Federal Housing Finance Agency. Some counties in the United States, as well as Hawaii, Alaska, Guam, and the United States Virgin Islands, have loan amounts that surpass the usual lending limit. Veterans may now take advantage of larger loan amounts since lending limitations on "VA jumbo loans" have been lifted; nevertheless, a modest down payment may be needed.

In addition to the maximum loan limit, the veteran's debt to income ratio must be considered. The debt to income calculator compares monthly debt (auto loan(s), credit card debt, student loans, etc.) to gross monthly income.
The optimum debt-to-income ratio is 41 percent. This implies that the veteran's monthly debt, including the planned mortgage payment, is equal to or less than 41 percent of his or her monthly income.

Eligible veterans can use a VA loan to . . .

  • Purchase a 1 to 4-unit house or a condominium unit in a VA-approved project.
  • Construct a house
  • Purchase and renovate a house at the same time
  • Installing energy-saving features or implementing energy-efficient renovations may help to enhance a house.
  • Purchase a manufactured house and/or a lot.

  Frequently Asked Questions About VA home-loans

Q. Are there closing-costs with a VA loan?
A. Typical closing-costs are charged and permitted on a VA loan, (i.e. title insurance, transfer taxes/fees, settlement, etc.), however, the Veteran's Administration does prohibit a number of fees that benefit the lender.

Q. Are VA loan appraisals tougher?
VA loan appraisals tend to be more stringent than other loan appraisals. Homes purchased with a VA loan must meet the VA’s Minimum Property Requirements (MPRs). In short, the home must be structurally sound, safe, and sanitary.

Q. Can a child of a veteran qualify for a VA loan?
A. Unfortunately, the VA loan benefit is non-transferable to dependents and non-dependents. (i.e. children). Spouses may be eligible for a VA loan provided they meet the VA guidelines.

Q. Can a VA loan be denied?
A. The VA loan can be denied by the lender. VA loan applicants must meet income, debt to income, employment requirements, and credit guidelines like any other mortgage.

Q. Can a VA loan close in 30 days?
A. Closing in 30 days is possible but unlikely. Lenders must verify income, credit, and other criteria. The appraisal usually slows down the loan application.

Q. Can a veteran cosign a VA loan?
A. The VA permits co-signers on VA loans. Legally married spouses can co-sign a VA loan. A fellow unmarried veteran is permitted to co-sign a VA loan. Some lenders will allow unmarried, non-military individuals to co-sign a veteran's loan, however, this option may limit how much the veteran can borrow or may require a down payment.

Q. Can I buy a house with a VA loan with bad credit?
A. Yes, maybe. The VA loan is similar to other home-loans with regard to credit quality. But unlike other loan options, there is no minimum score requirement, but most lenders require a 620 minimum credit score. The VA does extend some bad- credit options to vets with credit issues.

Q. When a veteran loses his or her original discharge papers and does not have a readable copy, what should he or she do?
A. A veteran should seek a Certificate in Lieu of a Lost or Destroyed Discharge from the Department of Veterans Affairs.

Any VA office would be happy to assist a veteran in obtaining the necessary proof of military service.

Q. Does a veteran's right to a house loan have an expiration date?
A. No, the right to a house loan is normally valid until it is used.
Service members, on the other hand, are only eligible for benefits for as long as they are still on active duty.

A fresh assessment of their eligibility must be made based on the duration of service they have provided and the kind of discharge they have received if they are discharged or relieved from active duty before using their entitlements.

Q. May a veteran join with a non-veteran in obtaining a VA loan?
A. Yes, however the guarantee only applies to the veteran's share of the loan.
The guarantee cannot cover the non-loan. veteran's
This does not apply to loans made to a veteran and his or her spouse if the spouse is not a veteran. (Consult lenders to see whether they are prepared to accept joint loan applications of this kind.) 
SOURCE: VA-GUARANTEED home-loanS FOR VETERANS