VA Home Loans – How do they Work?
VA home loans are not issued via the Department of Veteran Affairs. However, they do guarantee a part of each individual mortgage which will be paid in such circumstances that the homebuyer is unable to effectuate the loan. A potential homebuyer may apply to approved financial institutions that can offer financing on a home through the VA program.
This program has been specifically designed to serve veterans, in addition to active military personnel, as well as surviving military spouses. There are, however, some basic requirements that must be met. Bear in mind that the potential homebuyer must meet any one of the following requirements:
- The homebuyer must have served at least 181 days’ active duty within peacetime.
- The homebuyer must have served a minimum of 90 days’ wartime duty.
- The homebuyer, unless otherwise eligible, must have served a minimum of six years in the National Guard or the Reserves.
How to Prequalify for the VA Loan?
In order to prequalify for a VA loan, the potential homebuyer must be accepted by a VA approved lender. This prequalification takes merely a matter of minutes to accomplish, and it will provide a solid starting point when hoping to get a VA loan.
Once the prequalification is complete, a more detailed assessment of the homebuyer’s financial affairs is undertaken. This means supplying tax returns, bank statements, and pay stubs. In turn, what this will accomplish is to provide a lender with a good idea as to how much the homebuyer qualifies for.
It’s at this stage that the potential homebuyer will either receive a letter of preapproval or otherwise. The letter affords additional leverage with respect to the offer made on a home.
Do note, however, that both prequalification as well as preapproval are in no way binding. As such, there is no obligation of the lender to the homebuyer, or vice versa.
What does a VA Loan Entitlement Mean?
A VA loan entitlement serves as a Department of Veterans Affairs guarantee which pledges financial security with respect to a particular financial amount on a VA home loan.
Making a VA Loan Request on Bad Credit Terms
Can you still avail of a VA loan if you have bad credit or declared bankruptcy?
A VA loan is subject to the exact same terms as are conventional loans, on account that they are the provision of private lenders. Credit status and income requirements still apply. Thus, if you have made a declaration of bankruptcy within the previous two years and your credit remains unestablished, your options for obtaining a VA loan are severely diminished.
If you do have bad credit and wish to avail of a VA loan, there are resources available to help you: