We have so many soldiers and Veterans who have been stationed in North Carolina, or who are from here, that are ready to buy their first home! These Veterans are fortunate to qualify for a special Veteran Benefit, a VA loan.
This program has lower PMI rates, and no required down payment in order to qualify. It’s not a GUARANTEED home loan, meaning the Veteran must still qualify for a VA Mortgage Loan based upon the VA Loan Basic Qualifications and Guidelines.
The VA also limits the amount of closing costs that Veteran’s are allowed to pay in association with buying a home, which reduces the cost of home ownership even more! Additionally, there are no monthly VA Loan PMI fees, making all VA Loans comparatively cheap! Some FHA Home Loans have monthly PMI fees of over $267!
Service Requirements for a VA loan?
To buy a home, with a VA Loan, we will need your Certificate of Eligibility. This generally requires sending your DD-214 to the VA, with the VA Form 26-1880, which we will be glad to give you.
The Veteran’s Administration provides you with a Certificate of Eligibility. A “full” certificate will have an amount of $36,000. It’s a green form, approximately 8 x 11. If you’ve used your Eligibility, the Certificate should be sent to the Veteran’s Administration, and they will write on the Certificate the amount you have left.
There’s a formula for calculating Partial Entitlement on VA Loans, and just because you’ve used your Eligibility once, does NOT mean that you can not use it again.
VA requires a Service Duty equal to one of the following:
- You served 181 days during peacetime, Active Duty
- You served 90 days during war-time, Active Duty
- You served 6 years in the reserves or the National Guard
- You are the spouse of a service member who died in the line of duty or because of a service related disability.
Additionally, those who are Reservists and National Guard members may also qualify for a VA Loan. The enlisted Service days can differ from those quoted above for a VA Loan based upon WHEN you served, and weather or not you were serving during Peace time or War You can check here for more detailed VA Loan Service requirements. “In general, National Guard and Reservists are eligible to receive full VA Home Loan benefits if they “were activated” under the jurisdiction of the title 10 U.S. Code during the Iraq/Afghanistan conflict.”
What is the maximum VA Loan amount?
The maximum loan amount a Veteran can borrow in North Carolina for a VA Loan is $424,100 for all but the most Northern Coastal Counties in NC.
Keep in mind this is the Maximum Loan Amount for a VA loan with no down payment. If a Veteran wants to borrow more than $424,100 you only need to make a down payment equal to 25% of the amount OVER $424,100. So, for instance, if you are buying a $500,000 home, you would make a down payment of $18,975 – which is far less than the minimum required for a Jumbo Conventional Loan!
VA Loan Basic Qualifications and Requirements:
First off, you do not have to be a first time home buyer to qualify for a VA Loan. However, if you are a Veteran who qualifies for one of the NCHFA programs, they are also Mortgage Tax Credit great benefits! The MCC (Mortgage Tax Credit) benefits offer qualifying Veterans up to a $2000 credit each year you live in the home!
The minimum credit score for the MCC is 640, and the maximum income will vary based upon the NC County you want to buy a home in. The MCC Maximum Income limits for one person, in Alamance County is $64,000. The MCC Tax Credit Maximum Income for a family with 3 or more members in Johnston County is $85,000.
VA Loans are 100% no money down mortgage loan, so often times the Veterans we work with don’t need more than a $1000 or so to cover their portion of the costs… becauseSeller’s will often pay the closing cost.
The difference is with Foreclosures and Short Sales – where an already losing bank is involved in the transaction. That’s where we sometimes get questions about “rolling in closing costs” on a VA Loan.
Despite the obvious misconception, Closing Costs on a VA loan can NOT be financed. The VA allows for the seller or lender can pay the closing costs but they certainly can not be financed on a purchase transaction. Only the funding fee (the upfront PMI charged by the VA) can be financed. HOWEVER, the State of North Carolina does offer a closing costs assistance Grant, of up to 3% of the Loan Amount, for qualifying Veterans.
Some Veteran’s misunderstand that they must still “qualify” for a VA Loan. You must still meet the minimum Credit profile required by the Veteran’s Administration, and you must have income that is considered reliable and stable.
The VA Loan underwriters only look at one total Debt Ratio, and we’ve recently seen total debt ratios of 46 and 47% work for borrowers with credit scores above 640. For Borrowers between 600 and 639, you will be held closer to an overall ratio of 41%. VA Loans DO include heating expenses for the home and Child Care in the debt ratios.
Like USDA Home Loans, the VA Loan Underwriters are looking closely for 12 months of “Clean Credit.” This means they could place less emphasis on your credit score, and focus more on who you have handled credit for the past 12 months.
Can I purchase a second home using a VA Loan?
These loans are for Owner Occupied property. So, we can’t make a VA Loan on a “Vacation” Home or Investment Property.
The good news is that there is a provision that allows you to own two homes, and still be able to use the program.For example, if you are stationed at Fort Sam Houston and you buy a house in San Antonio, and then you are deployed… and your spouse wants to live near family in NC.
In that situation, we can probably use your benefits to purchase the home in NC. We must prove a “net tangible benefit” and your Spouse must live in the home for at least 6 months out of the year.
If you are ready to buy a house in NC, and want to know more about VA Loan basic qualifications, please call Steve and Eleanor Thorne, Government Mortgage Loan Experts, 919-649-5058 Because all mortgage loans that are backed by the Government have the “best” interest rates right now, this is a GREAT program to use! Connect with us on Facebook, Google+ – or leave us a note below. We want to keep you updated!