VA Loan Requirements In Arkansas

Taking the first steps toward buying your dream home can be exciting – and overwhelming. There are all kinds of different loan options available when you’re shopping around for mortgages, and a conventional loan isn’t always going to be the best fit. However, a VA (Veterans Affairs) loan could be a good option if you qualify.

It’s important that before starting the process of applying for a VA loan, you understand what they are and how they work. The first step in qualifying for a VA loan from a mortgage lender? Getting certified online. Start the process today by applying for a VA loan with Arkansas Federal Credit Union or by booking an appointment to talk to one of our home loan experts who can advise you on your options and walk you through the process of how to get a VA mortgage.  If you are in the process of buying your first home, you can download our free homebuyer guide to learn more about the homebuying process, including information on VA loans for first-time buyers. 

What Is a VA Mortgage Loan?

A VA, or Veterans Affairs, mortgage loan is a type of mortgage backed by the Department of Veterans Affairs. VA loans are intended to help service members, veterans, and their families buy homes. Lenders face less risk under a VA loan, as the government backing guarantees that they’ll be able to recover some (or all) of their losses if the loan defaults. Because of this, lenders are more likely to give borrowers a loan under more favorable terms.

VA mortgages are available to eligible veterans, active-duty service members, certain National Guard and Reserve members, and qualifying surviving spouses who meet VA requirements.

How Can I Qualify For A VA Loan? 

You need a Certificate of Eligibility (COE) in order to qualify for a VA loan. Registering for a COE is free, easy, and something you can do online in just a few minutes.

What you need to qualify for a COE may differ based on your state and active duty status. For example, veterans typically need to provide their discharge papers, while active duty service members will need to provide their statement of service.

If you’ve already bought and sold a home through a VA loan, you likely won’t have to go through the eligibility process again. Your VA mortgage loan eligibility can generally be restored online.

For individuals eligible for VA loans with conventional mortgages, the Veterans Improvement Act of 2008 allows you to refinance a non-VA loan into a VA loan. You may be eligible to refinance for up to 100% of the property’s value.

VA Loan Lender Requirements

The VA determines loan eligibility for prospective homeowners, but lenders may also have additional requirements. Lender requirements for VA loans will revolve around traditional lender requirements for loans.

Credit and Income

The VA doesn’t set a minimum credit score for veterans seeking VA loans. Lenders usually require a minimum credit score of 620 to be eligible for a home loan.

Residual Income

The VA requires veterans to have a set amount of income left each month after paying all their major expenses in order to cover typical needs.

The residual income requirement is used to make sure that the loan is affordable. It’s intended to make sure that homeowners will have enough money to pay their mortgage after paying other expenses each month.

Pros of VA Loans

VA loans are intended to make purchasing a home more accessible and affordable for qualifying veterans. If you are eligible, getting a VA loan can offer many benefits.

Down Payment

Because the Department of Veterans Affairs secures VA loans, you can purchase a home through a VA loan with no down payment as long as the house’s sale price doesn’t exceed its appraised value.

No Private Mortgage Insurance (PMI)

If you’re wondering, “How much is PMI on a VA loan?”, the answer is zero! VA loans are backed by the U.S. Department of Veterans Affairs, giving lenders the confidence to approve your loan without requiring Private Mortgage Insurance, even if you’re not putting any money down.

Home Type

You can get a VA mortgage loan for traditional and manufactured homes. The loan amount may vary depending on the type of home, but you will still be eligible for a loan.

VA Loan Rates

VA home loan rates are typically lower than conventional mortgage rates because the Department of Veterans Affairs secures the mortgage.

PrePay

With a VA loan, there is no prepayment penalty. You can pay more towards your mortgage to pay it off faster with no penalty.

VA Assistance

The Department of Veterans Affairs may be able to offer assistance if you run into temporary financial difficulties related to your mortgage or homeownership.

Things to Consider with a VA Loan

VA loans offer many benefits, but they may not be the right fit for every borrower. Before moving forward, it’s helpful to understand the requirements, fees, and property guidelines that may apply.

VA Funding Fees

You are charged VA funding fees when you close on a home with a VA loan. This fee can range anywhere from 1.25-3.3% of your loan amount. This is a one-time fee but can be costly, so it’s important to consider it when looking into VA loans. Veterans who receive VA Disability benefits are typically exempt from this fee.

Property Restrictions

For a VA mortgage loan, the property must be your primary residence. You can’t use this type of loan to purchase an investment or rental property. 

Less Equity

When using a VA loan, you may start your homeownership with little to no equity, as VA loans don’t require a down payment to purchase your home. Without a down payment, you may not have equity in your home immediately.

Where Can I Get A VA Loan?

If you’re wondering where to apply for a VA loan, it’s important to know that the VA doesn’t provide VA loans directly. Instead, they back loans provided by approved lenders. Most people will work with their local credit union or bank that’s been approved by the VA. When it comes to where you can apply for a VA loan, you can go directly through an approved lender, like Arkansas Federal, by applying online or visiting a local branch.

Apply for a VA Loan Today

VA loans can be a reliable loan option for people who are eligible for them. The security and affordability that a VA loan can offer often make purchasing a home more attainable for service members, veterans, and their families. When you apply for a VA loan with a lender, you could be eligible to purchase a home with no down payment and obtain a mortgage with a better interest rate. Ready to get started? You can get a VA mortgage quote quickly and easily online today – apply for a VA loan at Arkansas Federal, and we’ll help you get started on your journey to your dream home.