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The 2024 Guide to VA Loans

Read Time: 5 Minutes October 31, 2024

In keeping with our mission to serve and honor members of the Military, Newrez is proud to offer VA home loans, which help Military and Veteran families achieve their dreams of home ownership.

Military couple hugging in front of boxes

Roughly $148.75 billion in VA loans was given out in the 12 months ending in August 2024, according to the U.S. Department of Veterans Affairs.1 This loan program is unique because, typically, borrowers aren’t required to make a down payment or pay for private mortgage insurance. They can also sometimes get a lower interest rate, preferable terms and pay fewer closing costs than with other types of loans.

VA loans feature more flexible qualifying criteria than conventional loans to make it easier for Military members and their families to buy homes, refinance, or access cash through their home’s equity.

Service Requirements for a VA Loan

For a full explanation of service requirements for a VA loan, go to the VA’s website. But in summary, to qualify for a VA loan:

  • Active-Duty Servicemembers: You must have served a minimum of 90 days consecutively.
  • Veterans: Minimum service requirements vary depending on when you served and the conditions under which you were discharged. A breakdown is available on the VA website linked above.
  • National Guard or Reservists: Minimum service requirements vary depending on when you served. If you served after August 2, 1990, you meet minimum requirements if you served at least 90 consecutive days of active duty. Otherwise, you must have served at least 90 days active duty, or at least 6 creditable years in the National Guard/ Selected Reserve and discharged honorably, retired, or placed in Standby Reserve/ Ready Reserve.

If you are the surviving spouse of a service member who passed away in the line of duty or from a service-connected disability, there are also VA loan programs to assist you. Read details on the VA’s website.

Remember, the VA itself is not a mortgage lender. Private lenders originate the loans, and the VA guarantees a portion of it. In order to prove to a lender that you are eligible, you’ll need to provide a Certificate of Eligibility (COE). Your COE will provide the information necessary to calculate your available entitlement and the maximum loan amount the VA is willing to guarantee in the event of a default. Request a COE on the VA website.

VA Loan Income Requirements

VA loans don’t come with income limits, but your lender will want to verify your income to get a sense of what you can afford.

Generally, lenders like to see 24 months of consecutive employment, preferably with the same company or within the same industry. You will likely need to verify your income with the following documents:

  • Tax returns and W-2s from the past two years
  • Most recent pay stubs
  • Statements for checking, savings, retirement accounts and other investments
  • Driver’s license

If you’re self-employed, you can verify your income with two years of business tax returns and a profit and loss statement.

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Apply for your VA Home Loan Today!

VA Loan Credit Score Requirements

Unlike conventional or FHA loans, the VA doesn’t set a minimum credit score requirement. However, many lenders set their own minimum credit score for VA loans, commonly requiring a minimum score of 620.

Looking for a VA loan? Newrez offers VA loan products with a minimum credit score of 580.

If you have filed for bankruptcy or have a previous foreclosure, you will probably have to wait for two years after a Chapter 7 discharge in order to qualify for a VA loan.

Debt-to-Income Ratio Requirements for VA Loans

Debt-to-income ratio (DTI) is the percentage amount of your total monthly income that goes toward monthly debt payments. Your debts include your credit card payments, car payments, student loans, support payments and other monthly debts. Lenders consider your DTI when determining what you can afford.

VA Loan Limits

Veterans, Military servicemembers and eligible family members with full entitlement do not have a maximum limit on what the VA will guarantee. This means you typically won’t need to make a down payment, and if you default on your loan, the VA will pay your lender up to 25% of the loan amount.

You have full entitlement if:

  • You’ve never used your home loan benefit, OR
  • You’ve previously paid a VA loan in full and sold the property, OR
  • You’ve used your home loan benefit but had a foreclosure or short sale and repaid the debt in full.

The amount you can borrow is still limited by how much you can afford, as determined by your lender. For more details on entitlement, go to the VA website.

Closing Costs for a VA Loan

Even without a down payment, VA loan borrowers will have to cover typical closing costs when buying a home, such as title fees and appraisal fees. Specifically for VA loans, recipients often have to pay a “VA funding fee.” You won’t have to pay this fee if:

  • You're an active duty servicemember with a Purple Heart.
  • You’re receiving (or eligible for) VA compensation for a service-connected disability, OR
  • You’re a veteran spouse receiving Dependency and Indemnity Compensation, OR
  • You received a proposed or memorandum rating before the loan closing date stating that you’re eligible to be compensated, OR

The amount of the VA Funding Fee varies depending on whether this is your first use of your VA home loan benefit or a subsequent use and is a percentage of your loan amount. For a detailed breakdown of funding fee rates, go to the VA website.

Is a VA Loan the Right Loan for Me?

If you’re a Veteran, active duty Military or surviving spouse and you’re considering purchasing a home, refinance or access cash, Newrez loan experts would be glad to help you find the loan that fits your needs. From all of us at Newrez: Thank you for your service and sacrifice.

 

References:

1 Lender Statistics - VA Home Loans