Newrez: Empowering Military Homeownership with VA Loans
At Newrez, our core mission is to actively support Active-Duty Military personnel, Veterans, and their families. We achieve this through dedicated community outreach, invaluable consultation with our Military Family Advisory Council, and the provision of premier loan services. We are proud to offer Veterans Affairs (VA) home loans, a powerful tool enabling Military and Veteran families to fulfill their dreams of homeownership.
VA loans can provide substantial advantages for Military borrowers, potentially leading to significant cost reductions in various ways. This article will outline the key benefits of VA loans, detail the eligibility criteria, and guide you through the application process.
Navigate Directly To:
- Key Advantages of VA Loans
- Determining Your Eligibility
- Securing a Certificate of Eligibility (COE)
- Applying for a VA Loan
- VA Appraisals
- VA Funding Fee and Closing Costs
- Your Questions, Answered
Key Advantages of VA Loans
VA loans offer a distinct set of benefits designed to make homeownership more accessible and affordable for those who have served:
- No Down Payment: The most prominent feature of VA loans is that, for most qualified borrowers with full VA loan benefits, no down payment is required on their home purchase.
- No Private Mortgage Insurance (PMI): Unlike conventional mortgages that typically demand PMI when the borrower puts down less than 20%, VA loans are exempt from this monthly insurance fee, resulting in significant long-term savings.
- Competitive Interest Rates: VA loans frequently come with interest rates that are lower than those offered on traditional mortgages, translating to reduced overall loan costs.
- Flexible Credit Requirements: Due to the government backing of VA loans, lenders are afforded greater flexibility regarding minimum credit score requirements and debt-to-income ratios. The VA itself does not impose minimums on either, leaving this to the discretion of individual lenders.
Seeking a VA loan? Newrez proudly offers VA loan products with a minimum credit score of 580 for qualified borrowers.
Determining Your Eligibility for a VA Loan
To qualify for a VA loan, you must have served a specific minimum number of days, which varies based on different service factors. While the VA website provides a complete breakdown of service requirements, here’s a concise overview:
- Active-Duty Service Members: If you have completed at least 90 consecutive days of active service, you meet the fundamental service requirements.
- Veterans: Service requirements vary depending on your period of service (wartime or peacetime) and the circumstances of your discharge. Generally, Veterans who have honorably completed their term of service will qualify.
- National Guard Members: You meet service requirements if you have served 90 days of non-training Active-Duty Title 10 service, or at least 90 days of Active-Duty service including 30 consecutive days, or you have 6 creditable years in the National Guard with an honorable discharge.
- Reserve Members: You meet service requirements if you have served 90 days of Active-Duty service, or six creditable years in the Selected Reserve, and you were honorably discharged or placed on the retired list.
- Surviving Spouses: Under specific circumstances, spouses of deceased Military members can qualify for a VA loan. (Refer to the VA’s official list of qualifying circumstances for surviving spouses for detailed criteria.)
Securing a Certificate of Eligibility (COE)
Your eligibility for a VA loan is contingent upon obtaining your Certificate of Eligibility (COE) from the VA.
- Gather Necessary Documents: You will need documents that verify your service. For Veterans, this typically means a copy of your discharge papers (DD-214). For active service members, you’ll require a statement of service signed by your commander or personnel officer. (Learn more about required documentation.)
You can request a COE through one of three primary methods:
- Request a COE Online: You can initiate the process directly on the VA’s website.
- Go Through Your Lender: Lenders with expertise in VA loans are typically equipped to assist you in filing your COE application, often through an automated system.
- Apply By Mail: You can download the “Request for a Certificate of Eligibility” form from the VA’s website, complete it, and mail it to your regional loan center (the address is on the last page of the form).
Applying for a VA Loan
If you’re just beginning your house-hunting journey, we highly recommend getting pre-approved so you have a clear understanding of your affordability. When you are ready to make an offer on a home, a pre-approval letter serves as a strong signal to sellers that your offer is financially backed.
It can significantly benefit you to select a lender that is deeply knowledgeable about VA loans, as their expertise can help streamline the entire process. (Learn more about Newrez’s commitment to supporting Military families.)
To formally apply for a VA loan, you will generally need to provide the following documentation:
- Your Certificate of Eligibility (COE)
- Verification of Your Income (e.g., W-2s, tax returns, Leave and Earnings Statements (LES), recent paystubs, or 1099s if applicable)
- Records of Your Assets (e.g., bank statements for checking, savings, retirement accounts, and other investments)
- Identification (e.g., driver’s license)
Be prepared for your lender to conduct a full credit check prior to final loan approval.
VA Appraisals: Ensuring Property Standards
The VA mandates an official appraisal to confirm that the property meets its Minimum Property Requirements (MPRs) and that the home’s value is consistent with the offered price.
A VA-approved appraiser will evaluate the property’s condition and estimate its value. MPRs are in place to ensure the home is safe, sanitary, and structurally sound.
The VA will review the appraisal report and then issue a Notice of Value (NOV). If the property successfully meets VA standards, the loan process can proceed smoothly. Otherwise, necessary repairs may be required before closing, or the borrower may need to consider a more suitable home.
VA Funding Fee and Closing Costs
Depending on your specific circumstances, you may be required to pay a VA funding fee. This fee directly supports the ongoing operation of the VA loan program and can range from 0% to 3.3% of the total loan amount. The exact percentage you pay depends on whether you are seeking a purchase or refinance loan, the size of your down payment (if any), and whether you have utilized your VA benefit previously.
You may be exempt from paying the VA funding fee if you meet certain criteria, including:
- Having a service-connected disability rating from the VA.
- Being a surviving spouse who is receiving Dependency and Indemnity Compensation (DIC).
- Having received a Purple Heart.
- Having a proposed or memorandum rating from the VA stating your eligibility for compensation due to a pre-discharge claim.
You have the flexibility to roll this fee into your loan amount and pay it off over time, or you can opt to pay the full amount upfront at closing.
Beyond the VA funding fee, you will also typically incur standard closing fees, which may include origination fees, discount points, appraisal fees, title insurance, and other charges. It is often possible to negotiate with the seller of the property to cover a portion of these costs.
Your Questions, Answered
1. Can I reuse my VA home loan benefit?
Yes! If you’ve used your VA home loan benefit before, it can be restored. This typically occurs if you have fully repaid the previous loan and sold the property. Additionally, your benefit can be restored by selling your home and having another qualified Veteran assume your current mortgage, or by refinancing your VA loan into a non-VA loan and requesting a one-time entitlement restoration. If you have remaining entitlement, you can utilize it to purchase a new home, though a down payment may or may not be required depending on the loan amount and your remaining entitlement.
2. Are there loan limits?
For borrowers with full entitlement, the VA does not impose limits on the loan amount they will guarantee. In such cases, the maximum amount you can borrow will be determined solely by the lender, based on your individual financial circumstances and ability to repay.
3. What if the home I’m purchasing doesn’t meet Minimum Property Requirements (MPRs)?
If a property does not meet the VA’s MPRs, you have several options: You can negotiate with the seller to perform the necessary repairs to bring the home up to MPR standards. Alternatively, you have the right to walk away from the purchase agreement (especially if a VA option clause is included). Another option could be to seek non-VA financing for the property. It’s always best to discuss these options thoroughly with your lender.
VA Loans: Empowering Military Homeownership with Newrez
At Newrez, our commitment runs deep to serving those who have served our country. Our experienced mortgage experts are ready and eager to guide you through every step of the VA loan application process, helping you successfully achieve your homeownership goals.