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If you’re looking to purchase a new home or even refinance your house, consider looking into a VA Loan.  While there are a couple of different types of VA Loans, most of them are fairly straight forward. VA Loans are a great way to finance your house and come with some great benefits.  Some of the benefits of a VA Loan include:

• 0% Down Payment
• No PMI (Primary Mortgage Insurance)
• Streamlined Loan Process
• Higher DTI (debt to income) Ratios can be accepted
• Lower Closing Costs than traditional loans
• Typically easier to qualify for (if you’re a veteran)

If you’ve decided to look into a VA Loan, chances are you’re wondering about what different types of VA Loans might exist.

Top 5 Lenders For a VA Purchase Loan:

1. Veteran’s United
2. JG Wentworth
3. Quicken Loans
4. Lending Tree
5. NASB

The Different Types of VA Loans

VA Purchase Loans

A VA purchase loan is offered to Veterans who qualify with a specific credit score and financial history.  The loans are a great alternative to a conventional loan.

VA Purchase Loans Requirements

• Must be a veteran
• Must meet financial requirements (typically a FICO credit score of 620 or above
• Must have a qualifying debt to income ratio (DTI)
• Must have qualifying VA income

VA Refinance Loans

VA Refinance Loans are designed to give the homeowner cash for any specific needs such as home improvement.  VA Loans are great because the homeowner can refinance up to 100% of the home’s value and they don’t have to pay for mortgage insurance.  Conventional loans often require some sort of equity on the house.  If you are looking to get locked into a lower available rate, this is something important to consider.

VA Refinance Loans Requirements

• Must meet financial requirements (typically a FICO credit score of 620 or above
• Must have a qualifying debt to income ratio (DTI)
• Must be a Veteran
• Must have an existing loan
• Must have qualifying payment history on a current loan
• Must have qualifying VA income

VA Streamline Refinance Loans

VA Streamline Refinance Loans or IRRRL are available for anyone who has an existing VA Loan.  These tend to act in the same way as a VA Refinance Loan, however, it’s geared for existing VA Loan holders in an effort to streamline the process.

VA Streamline Refinance Requirements

• Must have an existing VA Loan
• Must have a qualifying credit score
• Must have a qualifying payment history
• Must have qualifying income

VA Jumbo Loan

A VA jumbo loan really isn’t that much different from a normal VA loan. The biggest difference is that the loan limit is higher than something known as the Fannie Mae conformation loan limit. However, in 2020, the VA will no longer have a loan limit.

If the home you plan to purchase is higher than the Fannie Mae conformation loan limit, then your VA loan will be classified as a jumbo loan. When this happens, you should expect your APR to be 1-2 points higher than a standard VA loan.

Jumbo loans do not change the fact that you have to pay a funding fee (unless you’re exempt), but you will have to pay that 2.15% of your loan. Luckily, this can be rolled into your mortgage. But, the more expensive your home purchase, the more money you’ll be shelling out at closing, or over the life of the loan if you chose to roll it into your monthly payment.

What is Considered Qualifying VA Income?

The VA only considers some of your income as qualifying income.  For example, the VA will accept military pay as qualifying income, however, they will not accept income made from gambling as qualifying income.  This is important when they look at your debt to income ratio.

VA Qualifying Income

• Full-Time Salary Income
• Part-Time Salary Income
• Bonus or Overtime Income
• Seasonal Employment
• Income from a divorce (such as alimony or child support)
• Income from commissions
• Income from Active Duty/National Guard/Reserve Service
• Income from rental properties (restrictions apply)
• Automobile allowances (restrictions apply)

VA Disqualifying Income

• Gambling Income
• One-time Payments (such as a bonus)
• Income from Unemployment
• Inconsistent Income (such as Post 9/11 GI Bill BAH)

When it comes to refinancing a VA Loan or even obtaining a streamlined Refinance Loan there are few companies we’d suggest looking at.

Veteran’s United

Veteran’s United is one of the largest VA lenders in the United States.  In 2017 they financed over $10 Billion in VA loans which makes them experts in the VA Loan process.  We recommend them mainly because of their unique focus on VA loans rather than other lenders who focus on a large variety of loans.

Quicken Loans

Quicken Loans is the nation’s largest lender and for a very good reason.  In 2017 they close $400 Billion in loans across the US. They also ranked highest in customer satisfaction for “Primary Mortgage Origination”.  While they aren’t as specialized as Veteran’s United, they still have an excellent track record and may be able to assist you in more than just VA Home Loans.

Want more info on VA Blogs? Be sure to check out our VA Buying Guide! 

How to use your VA Loan

Believe it or not, you can do more with your VA loan than go out and buy a pre-constructed home. You can also buy land and even build your own home if desired.

VA Land Loan

Land loans through the VA are just that, a loan to buy land. However, the land must come with a home on it or the intent of placing a home on the property. You can buy as much land as you like (the rumor you can only buy up to 5 acres is false). You can buy property for farming – you’ll have to prove to the VA you know what you’re doing and can make a living from it if that’s the route you’re taking – or you can just buy land and put a house on it. It can be a modular home or a home you want to build on it. However, with that being said, you must have official plans to build before you can get approved for a VA land loan.

VA Construction Loan

VA construction loans are not as popular as buying a pre-built home. However, it is not impossible to find. The VA requires you to have an approved builder, step-by-step plans with costs for each step, dates for completing each step, and the cost for materials within those steps. There are many lenders who will not do a 100%, no-money-down VA construction loan. However, there is the option of starting a standard construction loan with a lender and then converting it to a VA loan once the construction is complete.