VA loans help active duty, reserves, and veterans buy a house with no down payment and no mortgage insurance monthly making it one of the best loans out there while getting a low 30 year fixed rate loan based on market trends.
VA loans are not just for first-time home buyers, and they’re not restricted to low-income applicants. Here are the requirements you’ll need to meet to qualify for an VA loan
1. Consistent income and work history for last two years to support mortgage payment
In general, lenders want to see that you’ve worked for a year or two in the same field (if not the same employer). Consistent two year history needed, does not have to be same employer.
2. Debt to income ratio for VA loans.
The biggest factor in qualifying for an VA loan is whether you can afford the payment. As a rough guideline:
- your mortgage payment must not be more than 1/3 of your income (before taxes) and
- your mortgage payment PLUS other monthly debt payments (car loan, credit cards) must not be more than 43 percent of your income for a manual underwrite, or can go higher on the debt ratios if you get an automated approval through Desktop Underwriting AUS system.
- Car insurance, cell phone bills, utility bills are not included in the debt to income ratio just the monthly payments on the credit report and child support .
3. Zero Down Payment
There is no minimum credit score for VA loans, but in reality most lenders will wants a 620 score. However, we deal with some lenders that will go down to a 560 credit score but be prepared to get a lot of documentation to support your lower credit score.
When Can I Get a VA Loan After Foreclosure, Bankruptcy, or Short Sale?
Every once in a while, bad things happen to good people. Whether credit issues result from financial mismanagement or other circumstances, VA home loan guidelines are very forgiving. So, how long after a foreclosure, short sale, or bankruptcy can you get a VA loan?
- Foreclosure seasoning = 2 years, 1 year if proven out of borrower’s control
- Short sale seasoning = Same as foreclosure, but if not lates prior to short sale then no seasoning required
- Bankruptcy waiting period = Chapter 7 seasoning is 2 years from discharge date. Chapter 13 seasoning is at least 12 months from filing
A key VA home loan requirement after major credit events like these is re-established credit. Therefore, showing on-time rent and other credit references may show recovery from a foreclosure, short sale, or bankruptcy.
Rent Verification for VA Loans With Low Scores
For lower credit scores on VA or any other type of mortgage loan, rent or mortgage history is very important. A previous housing history is a good indicator of how someone will pay a new house payment. So lenders take rent very seriously. The most weight is given to a rent history proven by cancelled checks. Then a buyer proving on time payment history through checks shows the buyer is the one who actually made the payments. Plus it shows they were made on time and there is no disputing this. Next, rent payments verified through a rental company is good. The weakest would be rental payments made to an individual. In cases where payments are made to individuals, additional documentation may be required. For instance, cancelled checks or proof of withdrawal from a bank account for 12 months would help.
Keep in mind, using alternative credit is not a way to ignore a bad credit report or score. Alternative credit is a way of proving a more solid or in depth payment history than the credit report shows.
VA Mortgage Loan Checklist
- Signed and dated Statement of Service Letter (Ask us if we need it though)
- DD214 (if no longer in the military)
- Current LES
- Most recent W2 and Tax Return
- Most recent bank statement (all pages of actual monthly statement)
- Photo identification
- Military transfer orders – if transferring to a new base
We will request your COE, status report, complete your application, and discuss your mortgage options. Our goal is to have educated, confident, and approved buyers!
VA Loan Limits in Kentucky for 2020
How can I get a VA Mortgage loan in Kentucky in 2020?
Kentucky veterans and active duty service members are eligible. However, all veterans, active duty service members and National Guard members must meet certain requirements.
see below requirements for Kentucky VA Mortgage Loans:
- Served 90 consecutive days during wartime
- Served 181 days during peacetime
- Have more than six years of service with the National Guard or Reserves
Also, Kentucky VA loans are available to the surviving spouses of military members who died in the line of duty.
How does a Kentucky VA Home Mortgage Loan Work?
The Veterans Administration guarantees the loan, but they do not make it.. VA sets forth the guidelines as far as credit, income, assets, property requirements and inspections, but the lenders use this to make a lending decision. Usually the credit, income and assets, i.e. bank statements, pay stubs and tax returns, along with credit report and credit score to get a pre-approval upfront. The appraisal report is done by VA assigned appraiser in the area and neither the lender, borrower, realtors, sellers, have no control as far as choosing the Kentucky VA appraiser. VA will typically give the VA approved appraiser 10 days to make contact, and usually get the appraisal report back within 7-10 days after inspections.
How much can I borrow with a Kentucky Mortgage VA loan?
There is no max income limit for VA loans beginning in 2020.
VA Loan Limits in Kentucky for 2020
VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down-payment. These loan limits vary by county, since the value of a house depends in part on its location.
The basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.
VA county loan limit:
- VA’s 2020 Loan Limits are the same as the Federal Housing Finance Agency’s limits – 2020 Loan Limits (Effective January 1, 2020).
For purposes of determining the VA guaranty, lenders are instructed to reference only the One-Unit Limit column in the FHFA Table “Fannie Mae and Freddie Mac Maximum Loan Limits for Mortgages Acquired in Calendar Year 2020 and Originated after 10/1/2011 or before 7/1/2007”.
What is the credit score or fico score required for a Kentucky VA Mortgage loan?
VA has issued guidelines that calls for no minimum credit score. However, most VA Kentucky lenders will want to see a credit score of at least 620 before approving the mortgage. There are two lenders we work with currently that will do down to a 500 credit score, but it is very difficult to get them approved . The best thing to do is let someone pull your credit and see where you are at and go from there. A lot of lenders you will see will want a 620 credit score, with a few going down to 580. Again, this will vary greatly from lender to lender and be based upon our automated underwriting findings (AUS) from Desktop Underwriting.
Do VA Loans Require a Downpayment.
Kentuck VA home buyers do not require a down payment. It does not matter if you have a 500 credit score or 780 credit score, all VA loans offer a no down payment option to applicants. The only reason you would need a down payment is if you had to qualify for the home loan payment, or if you were borrowing with a co-applicant, that is not married to the borrower. For example, if a veteran is legally married, and his wife is not a veteran, that is fine with VA and you would not need a down payment, However, let’s say the borrower and his friend or girlfriend wanted to buy a house together, and we needed the co-borrowers income and credit to make it work, then you would need to put down 12% on the home loan since the borrower and co-borrower are not legally married.
Mortgage insurance on A VA loan?
One of the great benefits of VA loans is that have no monthly mortgage insurance premium. When you compare this to FHA, USDA mortgage loans in Kentucky, you would need to pay monthly mortgage insurance.
There is an upfront funding fee from VA , but if you are disabled, you can get this waived sometimes. See chart below
Kentucky VA Funding Fee Information
In order for VA to guarantee the home loan, there is a closing cost assessed by the VA to originate the loan called a funding fee. This fee will vary, depending upon the type of Kentucky VA loan, whether this is your first time to use your entitlement, if you are a disabled veteran, the down payment and if you served active duty or in the National Guard/Reserves.
How long does it take to close a VA Mortgage loan in Kentucky?
There’s no set-in-stone time limit for how long the Kentucky VA loan process takes, but on average, you should be able to get it done within 30 days depending on the appraisal report and home inspections
VA mortgage loans is the only Government sponsored mortgage that requires a termite inspection., so keep that in mindo on your inspections when you are having them done after the accepted contract.
Can I only use a VA loan once in Kentucky?
This is a common myth with many VA eligible home buyers and homeowners. If you’re eligible for the VA loan, then you’re eligible for your entire life. Plenty of home buyers end up using the VA loan more than once, mostly because it’s arguably the best loan program out there.
Can I get a Kentucky VA Mortgage loan with a previous Bankruptcy or Foreclosure?
- If the applicant has finished making all payments satisfactorily, the lender may conclude that the applicant has reestablished satisfactory credit
- If the applicant is still in the repayment period, as long as 12 months’ worth of satisfactory payments have been made and the trustee or Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
- 2 years from discharge date
- Manual underwrites allowed
- If the bankruptcy was discharged within 1 to 2 years, it is probably not possible to determine that the applicant is a satisfactory credit risk unless both of the following requirements are met
- The applicant has obtained credit subsequent to the bankruptcy and has made satisfactory payments over a continued period of time, and
- The bankruptcy was caused by circumstances beyond the control of the applicant such as unemployment, prolonged strikes, medical bills not covered by insurance and the circumstances are verified. Divorce is not viewed as a circumstance beyond the applicants control