Who Can Buy a Home with an VA Mortgage Loan
VA loans are available for eligible veterans and spouses of deceased veteran who died from a service connected disability. The govt. insured loans come with no down payment up to a certain limit and credit scores as low as 620. These loans are backed by the U.S. Department of Veterans Affairs. What makes VA loans popular are the low interest rates, no mortgage insurance, and zero down feature.
VA eligible property types include single family homes, condos, townhomes, and two- to- four unit properties such as a duplex, triplex, or fourplex. Manufactured and tiny homes are not eligible. There are not many loan products that provide you with the opportunity to get a loan on a duplex with zero down payment.
Loan Limits: There really isn't a loan limit. The VA loan is structured along with the county conforming loan limits. Whatever amount the loan is over the county loan limit, the service member must then put down 25% of that amount.
For example, if you're buying a home in San Diego County, the VA will guarantee up to $701,500 (the county's conforming limit) for a detached home, condo or townhome in 2020. If you need an VA loan to buy a duplex, they will insure up to a limit of $898,050. This means on a sales price of $1,000,000 for that duplex, you will only need a 2.5 percent down payment while the lender funds you approximately $75,000 more.
Property Conditions:The home or multi-unit property needs to satisfy VA's property requirements:
The roofing, heating, electrical all must be in satisfactory condition. The property must be free of termites, dry rot and fungus and lead-based paint be changed to the new minimum housing health standards.
Disadvantages; VA loans are not offered on property used solely as a rental property or vacation homes. In addition, sellers are not fans becuse of the zero down feature, property condition, and requests for sellers to help pay for closing costs.
VA-approved lenders vary from your local banks and credit unions to mortgage brokers/lenders that will offer you a VA loan. As of May , 2020 the banks, credit unions and some lenders have increased their VA credit score requirements to 640 or 660 or stopped doing them altogether like Navy Federal credit union.
Fortunately, some mortgage brokers will still fund VA loans for borrowers with middle credit scores from 600 to 640.