Home Purchase Options
1. “Zero Down Payment” VA Loan
For a “no-money-down” VA loan, the maximum amount you can borrow for this kind of VA loan is $726,200 for most US counties.
2. VA Loan with “Money Down”
You may still qualify for a VA loan for homes in “high-cost” areas as determined by the government.
- The “high-cost area” designation varies by county, and there are upper limits on what you can borrow.
- Your VA loan advisor will help you determine whether your home is in a “high-cost area” and will identify the VA loan options that are available to you.
- Maximum financing amount for a VA loan: the most you can refinance for a home purchased with a VA loan is 100% of the selling price or the appraised value, whichever is lower.
Two basic options are available for refinancing with a VA loan: Rate-term finance or an Interest Rate Reduction Loan (IRRL).
- With a VA loan, you can refinance a conventional mortgage with a VA refinance loan that has more favorable terms (e.g., a lower interest rate, shorter/longer term, etc.).
- Another option is to convert up to 85% of the equity in the home to cash. As long as the home has increased in value since the initial purchase, you can put your home equity to work for you in other areas. The cash process can be used to pay off other debts, save for college, or pay for home improvements, just to name a few. Your loan advisor can help you determine which option is best for you.
As with refinancing and mortgage, there are specific requirements that must be met when refinancing with a VA loan. Your loan advisor will help you understand all the requirements and the options:
- The veteran or spouse must be able to certify that the home is their primary residence.
- The refinance must be “streamlined” with relaxed credit qualifications and underwriting if the loan to be refinanced is:
- Not past due by 30 days or more.
- The new monthly payment (including principal, interest, taxes, and insurance) does not increase by 20% or more over the previous monthly payment.
- The interest rate on the new loan must be lower than the previous loan unless you are refinancing from an adjustable-rate mortgage (i.e., ARM) to a fixed interest rate.
- The new loan must include the VA funding fee and other allowable fees and charges. Your loan advisor will explain all fees and charges associated with the VA loan refinancing process.
- No lien other than the existing VA loan may be paid with the proceeds from an IRRL or “streamlined” refinance loan. If there is another lien on the property, that lien may need to be subordinated to the VA refinance loan.
- The maximum term for a VA IRRL loan is the existing loan term plus 10 years, to be at most 30 years and 32 days.
Specific property requirements are involved when purchasing a home or refinancing a current mortgage with a VA loan. To receive a VA loan, the home you are purchasing or the loan you plan to refinance must be for a home you will use as your primary residence.
Additional acceptable property types and uses:
- Buying a pre-existing home
- Building a new home
- Buying a condominium or townhouse
- Refinancing an existing VA loan to get a better interest rate or to take cash out