When it is time to live the American Dream and buy that first or last home, there are many decisions to be made. Probably most important is the financing, unless you are planning on paying with cash…LOL
With that, the VA has offered home loan financing for many years and their program is considered by many to be the best financing option available in the country.
Now as with anything there are certain circumstances where due to limitations set by the VA obtaining that final loan can be difficult. I wanted to bring out the most common ones and explain up front that these road blocks are in force to protect not hinder veterans. The VA is looking to protect them and not the lenders with these guidelines.
1. On every VA purchase loan there is a pest inspection required. These are normally routine but sometimes they can be a pest…yes pun intended. But again, if something is wrong with the pest inspection how much better for the home buyer to know upfront instead of after they have already moved in, committed funds to the new house and be stuck with sometimes very costly procedures.
2. If the property has a well for the main source of water for the home then it will also be required that an inspection be completed. Again to protect the veteran home buyer the VA needs to legitimize that this water is fit to drink, etc. so there will be no problems as they move in.
3. The VA also requires a full VA-approved appraisal inspection. This is done by a VA-certified appraiser and is even more strict then normal conventional ones. In most cases there isn’t any problems but every once and a while the appraiser will find items that don’t meet building codes, on really old homes the VA is particularly careful so that the veteran buying the property won’t have unexpected costs associated with older homes.
4. When purchasing a home using the VA eligibility, one of the calculations preformed is a residual income test. Basically, it determines how much left over cash is available after all the bills have been paid each month. The requirements vary by region and in the more expensive parts of the country sometimes this ratio prevents veteran home buyers from qualifying for the home loan.
5. Eligibly for a VA loan is also based on a honorable discharge from the military and anyone without that also can’t qualify to use their loan entitlement.