The VA home loan program offers a number of unique advantages over other loan types.
AnÂ FHA loan requires 3.5% down, and a conventional loan, 3 to 20 percent. But the VA loan offers 100% financing to current and former service members of the U.S. Armed Forces.
Home buying benefits extend beyond the service members themselves in many cases. Spouses of veterans and active military members enjoy zero-down home buying, as long as the eligible individualÂ is part of the transaction.
A survey by the National Association of REALTORSÂ®Â found that 64 percent of civilian home buyers are married, while 78 percent of military buyersÂ purchase a home with a spouse.
Applying for a mortgage when youâ€™re married can offer advantages, and in a few cases, challenges, compared to buying when single. And applying for a VA mortgage comes with a more considerations still.
But if youâ€™re married, currently or formerly part of the military, and looking to buy a home, it's possible to afford more home than you could on your own.Click to see your VA loan eligibility (Sep 23rd, 2017)
Members of the Army, Navy, Marines, Air Force, and Coast Guard typically marry someone outside of the armed services.
Fortunately, VA mortgage loan guidelines address this common occurrence. Both applicants on a VA home loan need not be VA-eligible to get the full benefit of the program -- as long as they are married.
They get the full guarantee as long as one of them has a Certificate of Eligibility (COE), the document that verifies that the buyer has fulfilled the military service requirement.
Both spouses can apply for the mortgage, and both of their incomes can be used to qualify. A dual income increases the purchase price for which a couple can be approved.
The VA loan benefit also transfers to surviving spouses who have not remarried, or some who remarry after the age of 57.
Marriage can work in your favor when applying for a loan, but it can alsoÂ cause some challenges. Most of them can be remedied if you know how VA lenders look at these situations.Click to see your VA loan eligibility (Sep 23rd, 2017)
Transfers are a way of life in the military, and they can derail the home buying process if one spouse gives up a job to move.
This wife or husband who follows the transferred individual is called a â€śtrailing spouse.â€ť Mortgage guidelines specifically address trailing spouse income within written guidelines. Lenders count income in one of two cases.
In the second scenario, the company must verify employment via a letter describing the job title, start date and salary. The new job can only be counted if the spouse has at least a two-year history in that line of work.
Still, these rules can make the difference when VA loan applicants plan to buy a home in the military memberâ€™s new location.
Nearly all mortgage programs adhere to a credit score rule in which the lower of both spousesâ€™ FICO scores is used for qualification. The lower score is called the â€śrepresentativeâ€ť credit score.
For example, in the following case, 689 would be the representative credit score.
The eligible veteranâ€™s middle score is used for qualification purposes since it is the lower of the two middle scores on the application.
However, itâ€™s a fortunate fact of VA home loans that there is no minimum credit score requirement. The VAâ€™s guidelines state that applicantsâ€™ credit history can be considered satisfactory if they have paid their accounts on time and not incurred major derogatory credit in the last 12 months.
That being said, most lenders set a minimum score for VA lending between 550 and 620. If your spouseâ€™s credit score is too low for lenders, you have the option of applying for a mortgage in your name only, as long as you are the eligible veteran.
Your spouseâ€™s credit score and debts wonâ€™t be counted on the application, as long as you donâ€™t live in a community property state. But if you do, the rules are as follows in the following section.Click to see your VA loan eligibility (Sep 23rd, 2017)
Lenders in community property states view loan applications differently.
The VA Lenderâ€™s Handbook says, â€śIn community property states, information concerning a spouse may be requested and considered in the same manner as for the applicant, even if the spouse will not be contractually obligated on the loan.â€ť
Community property states are as follows.
In these states, assets married couples acquire during their marriage are considered joint property, and liabilities incurred by either spouse may obligate them both.
That is an extra concern for mortgage lenders, and most want to know that the non-borrowing spouse does not add too much to the debt burden of the family.
For instance, the eligible veteran easily qualifies for a home loan because she has just $10 per month debt obligation from one credit card.
The spouse, however, has a car payment of $500 per month.
If the car payment increases the debt-to-income ratio of the loan beyond acceptable levels, the lender could turn down the loan.
If youâ€™re in a community property state and want to keep your spouse off your mortgage application, you might be better off with a conventional (non-government) home loan.
VA home loan rates today are low, much lower than those of conventional loans. This is why these mortgages are a favorite among the military community.
Get a VA loan rate quote, which does not come with any obligation, but does come with your live credit scores. You donâ€™t need to disclose your social security number to get started, and requesting a quote takes just minutes.Click to see your VA loan eligibility (Sep 23rd, 2017)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2017 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)