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 $417,000.
2. VA Loan with “Money Down”
For homes in “high cost” areas as determined by the government, you may still qualify for a VA loan.
- 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 by 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.
There are two basic options available for refinancing with a VA loan: Rate-term finance or an Interest Rate Reduction Loan (IRRRL).
- 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 95% of the equity in the home to cash. As long as the home has increased in value since the initial purchase, this allows you to 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 certain 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 his or her primary residence.
- The refinance must be “streamlined” with relaxed credit qualifications and/or 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 any 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 IRRRL 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 IRRRL loan is the existing loan term plus 10 years, not to exceed 30 years and 32 days.