VA Loan Requirements

VA Loan Down Payment

The VA Home Loan has always had a no-down payment option. There are some exceptions to this rule. For example, if the purchase price of the property is greater than the reasonable value determined by the VA appraisal, you will have to provide a down payment so that the loan equals the amount approved by the VA. You may also want to make a greater down payment than required to lower your monthly mortgage payments and reduce the amount of interest you will pay over the life of the loan.

VA Loan Appraisal

For a new VA Home Loan, you will be required to pay for a VA approved Appraisal. The typical cost for a VA Appraisal ranges from $350–$700 depending on your area. VA Guidelines do not require an appraisal if you are looking to refinance your existing VA Loan, however lenders can still require one.

Credit Requirements

Most lenders require a minimum FICO credit score of between 620–660 in order to be eligible for a VA Loan. If your FICO score is less than 620, it is still possible to get a credit exception if you have a clean mortgage payment history and no outstanding judgments, liens or past due amounts on your credit cards.

VA Loan Private Mortgage Insurance (PMI)

VA Loans do not require PMI (Private Mortgage Insurance). Instead the Veterans Administration charges a VA Funding Fee. This fee helps the VA mitigate the cost incurred for guaranteeing the small percentage of loans that default.

VA Funding Fee

The VA Funding Fee is rolled into your new loan. For Active Duty and Veterans, if the down payment is between 0%–4.99% and this is your first VA Loan, the Funding Fee is 2.15% of the loan amount. If it is your second time using your VA Loan Eligibility, the Funding Fee is 3.30%. If you are currently receiving VA Disability Benefits with 10% or greater disability, you are exempt from the VA Funding Fee.

Foreclosure, Short Sale, or Bankruptcy

Most lenders require 3 years of proven credit worthiness after a Foreclosure or Short Sale. Chapter 13 Bankruptcy is allowed if discharged over 12 months. Chapter 7 Bankruptcy is allowed if discharged over 24 months, both with a clean mortgage history.