Florida VA loans are designed to give our military whether active or retired the benefit of purchasing a home with zero down payment and no mortgage insurance. You may wonder how they can offer 100% financing. They do this by applying a funding fee that is paid directly to the Department of Veteran Affairs. The fee is added to the loan and included in the financing.
The funding fee ranges based on a few factors. Is this your first VA loan? Are you on active duty or retired? Are you National Guard or Reserve? Are you contributing a down payment?
The table below outlines what funding fee applies.
Borrowers who receive any disability payments from VA or considered to be at least 10% disabled are exempt from paying the VA funding fee and qualify for 100% financing without mortgage insurance.
VA only allows a loan amount up to $417,000 including the VA funding fee. This means if the loan amount exceeds $417,000 you will be required to contribute a enough down payment to reduce the loan to $417,000. Gift funds from a family member are allowed.
When you apply for a VA loan with zero down payment there are closing costs associated with obtaining a loan. The seller can contribute up to 4% towards your closing cost.
Being active or retired military is not the only qualification for a VA loan. There are credit and income requirements also.
The minimum credit score will go down to 620, most mortgage lenders will require a minimum of a 640 credit score for a VA loan. Additionally most lenders like to see 1-3 positive tradelines such as credit cards reporting for at least 12 months.
Lenders will not allow borrowers who have had bankruptcy, foreclosure, Deed in Lieu or short sale in the last 2 years.
When considering how much home you can afford VA does allow your debt to income ratio to go as high as 45%, but in most cases the lender only allows 41% debt to income ratio. This means your total monthly obligation cannot exceed 41% of your gross monthly income.
VA only allows the spouse of the veteran to be a co-borrower. The spouse must meet the credit qualification and their income is included in the debt to income calculation.