If you’re a veteran or active-duty military member in the Dallas metroplex, chances are you’ve heard of the incredible benefits of VA home loans. These loans offer many benefits for many veterans looking to purchase a home, thanks to their flexibility and favorable terms. In this guide, we’ll walk you through the details of the VA home purchase and refinance options available to you.
Whether you’re a first-time homebuyer or looking to refinance, understanding the process and advantages of VA home loans is crucial to making the best financial decisions.
What is a VA Home Loan?
A VA home loan is a mortgage loan offered to veterans, active-duty military personnel, and surviving spouses by approved lenders, with backing from the U.S. Department of Veterans Affairs (VA). The primary advantage of a VA loan is that it allows qualified borrowers to purchase a home with no down payment (up to certain limits), a competitive interest rate, and no private mortgage insurance (PMI).
Advantages of a 100% VA Mortgage in Dallas/Fort Worth
If you’re a veteran looking to purchase a home in Dallas/Fort Worth, the VA home loan program can offer tremendous financial advantages:
No Down Payment: One of the biggest advantages is that you can borrow 100% of the home’s value without needing a down payment, which can be a significant burden for many homebuyers. This means you can buy a home without draining your savings.
Lower Interest Rates: VA loans typically offer lower interest rates compared to conventional loans. These favorable rates help reduce your monthly mortgage payments and save you money over the life of the loan.
No Private Mortgage Insurance (PMI): With traditional loans, if you put down less than 20%, you’re usually required to pay PMI, which increases your monthly payments. VA loans don’t require PMI, which can save you hundreds of dollars each month.
Competitive Closing Costs: While there are still closing costs associated with a VA home loan, these costs tend to be lower than what you might find with other types of loans. The VA also limits how much a lender can charge for fees, keeping your closing costs in check.
Lenient Credit Requirements: VA loans have more lenient credit requirements compared to conventional loans, meaning even if you have less-than-perfect credit, you may still be able to qualify.
- Expanded Loan Limits: standard VA mortgage are limited to $806,500 loan limits in Texas. However, new high-balance and VA Jumbo loan options are available up to $2m for qualified Vets.
Step-by-Step Guide: How to Qualify for a VA Home Loan
Understanding the qualifications for a VA home loan can seem like a daunting process, but it doesn’t have to be. Follow this step-by-step guide to ensure you meet all the requirements.
1. Verify Your Eligibility
To be eligible for a VA home loan, you must meet specific service requirements. Here’s what you need to know:
- Active-duty service members: Generally, you must serve at least 90 continuous days of active duty during wartime, or 181 days during peacetime.
- Veterans: You must have served at least 90 consecutive days of active duty during wartime, 181 days during peacetime, or 6 years in the National Guard or Reserves.
- Surviving spouses: If your spouse died during active service or as a result of a service-related disability, you may still be eligible.
To verify your eligibility, you’ll need a Certificate of Eligibility (COE) from the VA, which can be obtained online, through your lender, or by mail. Contact us today if you need assistance by submitting the short Info Request Form below.
2. Determine Your Creditworthiness
While the VA doesn’t set a minimum credit score, but most lenders will require a credit score of at least 600 when financing the maximum 100% loan to value. However, some lenders may accept lower scores, particularly if your down payment or financial situation is stronger.
3. Calculate Your Debt-to-Income (DTI) Ratio
The VA doesn’t have a strict limit on your DTI ratio, but most lenders will look for a DTI ratio of 43% or lower. This means your monthly debts (including your future mortgage payment) should not exceed 43% of your gross monthly income.
4. Get Pre-Approved
Once you’ve verified your eligibility and reviewed your financial situation, the next step is to get pre-approved. Your pre-approval will give you a better idea of how much house you can afford and allow you to make an offer on a home with confidence. Connect with us 7 days a week to complete your application.
5. Find Your Dream Home
Now that you’re pre-approved, it’s time to start shopping for your new home! When you find a home you love, mortgage company will help you navigate the next steps, including home inspections and appraisals.
6. Close the Loan and Move In
After finalizing your home purchase, you’ll close the loan and move into your new home. Keep in mind that the VA limits the amount of closing costs that veterans can pay, and some costs may even be covered by the seller.
VA Loan Refinance Options
Many vets that current own a home may want to consider refinancing options to save money or access cash. Here are two main refinancing options available through the VA:
1. Interest Rate Reduction Refinance Loan (IRRRL)
The IRRRL, also known as a VA Streamline Refinance, is a simple and low-cost way for existing VA loan holders to refinance into a lower interest rate. Here are the key points:
- No Appraisal Required: With an IRRRL, you may not need to have your home appraised, which can save time and money.
- No Income Verification: Lenders typically won’t require you to submit your income or employment information.
- No Credit Score Requirement: While lenders may check your credit, the VA doesn’t have a credit score requirement for IRRRLs.
- Quick and Easy: IRRRLs are designed to streamline the refinancing process and reduce paperwork, making it a fast option for those looking to save on their monthly mortgage payment.
2. VA Cash-Out Refinance
A VA Cash-Out Refinance allows you to refinance your existing mortgage and access cash from your home’s equity, up to the full appraised value. This is a popular option for veterans who need cash for home repairs, debt consolidation, or other expenses. Here’s what you should know:
- Access to Home Equity: Texas has special requirements for VA cash-out refinancing and it’s often limited to 80% loan to value. Eligible Veterans can borrow up to 80% of your home’s appraised value, meaning you can pull out cash while still maintaining full ownership of your property.
- No Private Mortgage Insurance: Like the VA home loan, there is no PMI requirement with a cash-out refinance, which can save you money.
- Potentially Lower Rates: A cash-out refinance can also help you lock in a lower interest rate, making it a potentially cost-effective way to access cash.
- Eligibility: You’ll need to meet basic VA eligibility and credit requirements, and your home must meet the VA’s appraisal standards.
VA home loans are one of the best benefits available to veterans, active-duty military members, and surviving spouses. With a 100% mortgage, low-interest rates, and no PMI, the opportunity to buy a home in Dallas/Fort Worth has never been more accessible. Whether you’re looking to buy your first home or refinance an existing mortgage, the VA loan program offers unmatched advantages.
By following the steps outlined in this guide, you can take full advantage of this benefit, ensuring you’re on the right path toward securing the home of your dreams. Don’t forget to explore your refinancing options, such as the IRRRL and the VA Cash-Out Refinance, to make the most of your home investment.
Veterans that have questions can reach out to us by calling or just submit the Info Request Form on this page.
