Do I Qualify for a VA Loan? Understanding Your Eligibility and Benefits

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For veterans and active-duty service members, VA loans represent an incredible opportunity to own a home with favorable terms and 100% financing. Understanding whether you qualify for a VA loan and the benefits it offers can significantly impact your homeownership decisions.

Qualifications for a VA Loan

The Department of Veterans Affairs (VA) sets specific criteria that applicants must meet to be eligible for a VA loan. These qualifications are centered around service history, duty status, and financial readiness.

  • Service Requirements:
    • Veterans: Must have served 90 consecutive days of active service during wartime, or 181 days of active service during peacetime.
    • Active Duty: Individuals currently serving must have completed at least 90 consecutive days of service.
    • National Guard or Reserve Members: Must have served for at least six years, or have been discharged for a service-connected disability.
  • Certificate of Eligibility (COE): This is a key document that verifies to lenders that you meet the minimum service requirements. Obtaining a COE is a critical step in the VA loan process and we can help take care of that for you
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  • Credit and Income Requirements: While the VA does not set a minimum credit score, lenders typically have their criteria — usually around a 640-credit score. At Allied First Bank our minimum credit score is 580. You also must demonstrate a reliable income and a debt-to-income ratio that satisfies the lender’s requirements.
  • Primary Residence: VA loans are intended for primary residences. This means you must intend to live in the home you're purchasing with the loan.
  • Suitable Home Condition: The property must meet certain safety, sanitation, and structural integrity standards as determined by a VA appraisal. If there are issues with the property these will typically need to be repaired before you complete the purchase.

Benefits of a VA Loan

VA loans are highly sought after due to the numerous advantages they offer, making homeownership more accessible and affordable for those who have served.

  • No Down Payment Required: One of the most significant benefits of a VA loan is the ability to finance 100% of the home's purchase price, meaning no down payment is required in most cases.
  • No Private Mortgage Insurance (PMI): Unlike conventional loans, VA loans do not require PMI, regardless of the down payment amount. This can lead to substantial monthly savings.
  • Competitive Interest Rates: VA loans typically have lower interest rates compared to conventional loans, partly because they are backed by the government.
  • Limited Closing Costs: The VA limits the closing costs lenders can charge to VA loan applicants, making the process more affordable.
  • No Prepayment Penalties: You can pay off your VA loan early without facing any penalties, allowing for greater financial flexibility.
  • Assumability: VA loans can be assumed by another party (subject to lender approval), which can be a selling point if you decide to sell your home later.
  • Additional Support and Safeguards: The VA offers assistance to borrowers in financial hardship to help avoid foreclosure, adding a layer of security for VA loan holders.

Conclusion

VA loans offer an outstanding opportunity for veterans and active-duty service members to achieve homeownership with favorable terms. If you meet the service requirements, a VA loan could be an excellent choice for you. The benefits, including no down payment, no PMI, competitive rates, and limited closing costs, make it a uniquely advantageous option for those who have served their country. Give us a call or fill out our pre-qualification form today to find out more. Thank you for your service.

Request a Consultation with an Allied First Bank Loan Specialist

Allied First Bank of The Carolinas

  • Michael Parker
  • info@afbcarolinas.com
  • (800) 697-4371
  • MPO NMLS#: 457569
  • AFB NMLS#: 203463
  • 3804 Peachtree Ave.
  • Suite 200
  • Wilmington, NC 28403

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