If you are a veteran, it is important to understand your eligibility for a VA home loan. The program is designed to give you the financing you need to purchase a home, but there are some requirements. Read on to learn about the changes to funding fees and requirements for obtaining a certificate of eligibility. Also, learn about down payment assistance for home loan veterans
VA home loan eligibility expanded to include reservists
The new VA home loan eligibility rules for reservists make it possible for these service members to qualify for a loan. This program allows active-duty members of the military and those who are in the National Guard to purchase a home with a low down payment and no private mortgage insurance. In fact, 3.5 percent of VA-backed loans are made to members of the Guard and Reserve.
There are several benefits to VA home loans for National Guard and Reserve members, including a low down payment and the lowest average fixed interest rates. The new rules also provide early access to the benefit for Guard members who support state response activities during disasters. According to the National Guard Association of the United States, over 50,000 Guard members have gained eligibility for VA loans. Many of these members served in the frontlines of the pandemic or other major emergencies.
VA funding fee changes
The VA funding fee on a home loan is a government mandated closing cost that depends on a variety of variables, including the type of loan, down payment amount, and borrower’s military service. The chart below shows the fee structure for active-duty, Reserve, and National Guard members. The fee will remain the same through 2022, but it is possible that the fee structure will change in the future.
As of Jan. 1, 2020, the VA funding fee for a home loan for veterans will be increased from 2.15% to 2.30% for first-time borrowers and from 2.40% to 3.60% for veterans who have previously used the VA’s home loan program. The fee change is designed to pay for disability compensation for veterans from the Korean demilitarized zone (Korea) or Vietnam era (Sept. 1, 1967-Aug. 31, 1971). The new law also removes the loan limit for the Native American Direct Loan Program and exempts veterans who receive a Purple Heart from paying the VA’s funding fee.
Requirements for obtaining a certificate of eligibility
Before applying for a home loan, veterans need to make sure they meet the requirements for a VA home loan. They can complete a COE request form and mail it to the regional loan center. This process will take a little longer than filling out a form online. The applicant must also provide some documents and information to support their eligibility. Getting ready to submit these documents and information ahead of time will help expedite the process.
First, they must have completed their service for at least 181 days during peacetime or 90 days during a wartime period. They also must have served in the National Guard or Reserve for at least six years. They must also have an honorable discharge.
Down payment assistance for veterans
There are many benefits to receiving down payment assistance for a home loan from a VA lender. While you do not have to pay a down payment, it is recommended. The down payment can save you thousands of dollars over the life of the loan. Without the down payment, you may find yourself with less cash to cover emergencies and other moving expenses.
If you are eligible for the program, you may be able to receive up to $15,000 in down payment assistance. The VA will often work with you to find a co-borrower or a lender to help with the rest. Another option is the NC Foreclosure Prevention Fund, which provides zero-interest loans of up to $36,000 to help veterans with low incomes meet their mortgage payment. This program also provides job training and financial planning for those transitioning from the military.
Cost of obtaining a certificate of eligibility
Obtaining a COE from the VA is a crucial step for qualifying for a home loan. It is required for the VA to grant the loan, and is also necessary for verification. The COE is available from the VA’s ACE website, but many lenders will assist you in obtaining the COE directly through the lender’s website. You will want to find a knowledgeable loan officer to help you navigate the entire process and lock in the best interest rates. Getting the COE should take no more than five minutes.
Getting a COE from the VA does not require an upfront fee. However, it does require that you show your current military status. Depending on the VA, your COE may not be immediately available. This is why it’s best to work with a lender who has access to the VA’s online system. A lender can also expedite the process by providing the appropriate forms.