3 Home Buying Tips for Veterans
My personal opinion of the VA loan is that it’s one of the best loan programs on the market. It just doesn’t get better than a mortgage without a down payment requirement, no private mortgage insurance requirement and the ability to roll the closing costs into the loan.
Yes, the loan has very specific requirements that may frighten away some borrowers and a whole bunch of real estate agents who will caution veterans about these. But they are by no means insurmountable hurdles. Let’s take a look at three things to consider when you’re thinking of going after a VA loan.
There is no minimum credit score required by the VA to qualify for a VA loan. The problem here is that the Veterans Administration doesn’t make these loans, it guarantees them. That means you’ll need to see a lender and meet its credit standards.
Now, the good part about this “hurdle” is that you aren’t a conventional borrower. Your application is backed by the federal government in the form of a guarantee that the loan will be repaid. Therefore, lenders have a tendency to be a bit more lenient with their standards.
Veterans typically need a minimum credit score of 620 (conventional buyers usually need a 740 score to get a decent rate). Check your credit score before seeing a lender and work on increasing it if it falls below 620.
You earned these benefits – take advantage of them.
2. Occupancy Rules
The good, hardworking taxpayers of the United States don’t want to help you purchase an investment. Therefore, you must plan on personally occupying the home as your primary residence.
This doesn’t mean you can’t ever rent it out, which is a fear of many veterans who know all too well about that spur-of-the-moment PCS. Not only can you then rent out the home, but there’s a possibility of using your VA benefits to purchase another home in your new town.
3. Appraisal Rules
This is the one that most real estate agents caution veterans about as soon as the words “VA loan” leave their mouths. For some reason, those that are least informed about VA loans seem to be under the misconception that the lender will require the home to be in perfect condition.
Yes, the VA has minimum property requirements. These include that the home must be safe and sanitary. The list is long, and many items on it are simple things such as the home must have a supply of sanitary drinking water and that waste flows into a sewer or septic system.
Other items the VA requires include:
- A roof free of leaks.
- Natural ventilation in attics and crawl spaces.
- The lot is graded so that drainage goes away from the structure.
- The purchase of a property within 220 yards of a petroleum or gas pipeline will require additional approval.
- The home is free of mold, peeling paint, dry rot, leaks, exposed wires, broken windows and wood-destroying pests.
Now, this is a highly simplified list of requirements. Your lender can fill you in on the details.
The takeaway here is that if your real estate agent is VA loan savvy, he’ll be able to guide you to view homes that he knows will pass a VA appraisal or those that can be repaired before the close of escrow.