When it comes to buying a new home, there isn’t a shortage of options for a mortgage based on the homebuyer’s financial needs. Most lenders offer conventional mortgages, conforming and non-conforming loans, and amortizing and non-amortizing loans, all of which have fixed interest rates. Other types of loans offered by lenders include hybrid, interest-only, and payment-option loans, all of which have adjustable interest rates.
For homeowners struggling to find the right mortgage that fits their financial needs, there are also government-sponsored loans. Two of the most popular ones include the FHA loan offered by the Federal Housing Administration and the USDA loan offered by the United States Department of Agriculture. Another popular government-sponsored loan offered exclusively to US service members and veterans is the VA loan, which is guaranteed by the US Department of Veterans Affairs.
The VA Loan Program
The VA offers veterans and service members two loan types: VA direct and VA-backed home loans. In the case of the VA direct home loan, the US Department of Veteran Affairs serves as the mortgage lender and the entire loan application process is done exclusively with the VA. In the case of VA-backed home loans, the VA guarantees a portion of the loan obtained from a private lender. Since the VA guarantees the private lender a recovery of some or all of the losses brought on by a foreclosure, private lenders tend to offer better loan terms.
Both the VA direct and VA-backed home loans are designed to help veterans and service members with home-related costs. These expenses include purchasing a home, building a new home, renovating their current home, and even refinancing a home. While the VA loan still requires veterans and service members to have an established credit history and a stable source of income, they are not required to make a down payment in almost 90% of all cases.
Eligibility for a VA Loan
Eligibility requirements for VA home loans vary depending on the status of the veteran or service member. In many cases, applying for a Certificate of Eligibility (COE) will depend on whether or not a service member is on active duty, a member of the National Guard, or a member of the Reserve. The length of service is also a determining factor for eligibility, which also varies depending on the type of service provided and when a service member was on active duty.
Application for a VA Loan
The application process for a VA loan is going to vary depending on the type of loan being applied for (VA direct or VA-backed) and the status of the veteran or service member. The application process will also differ depending on whether a service member is a current or former member of the National Guard or a current or former member of the Reserve. Whether or not a service member is on active duty, has been discharged, or has a surviving spouse will also determine the home loan application process.
VA Loan Programs for Surviving Spouses
The VA offers both direct and VA-backed home loans to surviving spouses of service members. To qualify for a COE, however, the spouse must meet at least one of the following requirements as determined by the VA:
- The Veteran is missing in action (MIA)
- The Veteran is a prisoner of war (POW)
- The Veteran died while in service or from a service-connected disability and the spouse has not remarried
- The Veteran died while in service or from a service-connected disability and the spouse has not remarried prior to age 57 or before December 16, 2003
- The Veteran had been completely disabled and died, but their disability may not have been the cause of death
VA Loan Limits
As of 2020, veterans and service members who have full entitlement don’t have any limits on their VA loans. For veterans and service members who have remaining entitlement, loan limits exist based on the county the veteran or service member lives in or intends to live in. In the event that a veteran or service member defaults on their loan with a private lender, the VA will pay up to 25% of the county loan limit minus the amount of entitlement used by the veteran or service member. The VA does not limit how much a veteran or service member can borrow.
To learn more about the qualifications for a VA loan either visit the official VA website or contact MCS Mortgage at 833-415-LOAN or by email at Hello@MCSMLS.com for a consultation.
MCS Mortgage is a licensed mortgage broker that services the states of Florida, Maryland, and Virginia. In Maryland, MCS services the areas of Annapolis, Baltimore, Bethesda, Columbia, Towson, and Upper Marlboro. In Virginia, MCS services the areas of Annandale, Alexandria, Arlington, Catonsville, Falls Church, Fredricksburg, Fairfax, Fairfield County, Gainesville, Loudoun County, Manassas, Prince William County.