With mortgage rates near 65 year lows, it could be the best time in the past decade or so to buy a home. There is plenty of “stock” available in nearly every market and in some markets, like FL, AZ, CA and a few others, prices have come down from near top of the market “values” compared to just a few years ago.
The “bad” news, well it has become somewhat more difficult to qualify for a home loan. The good news, however, is that there are fewer hoops to jump through than you might think on VA Loans still. So for those that do qualify for a VA loan and there are MANY that do, it is still the best option for a purchase or a refinance.
Let’s talk about a few of the hoops, and see how easy they really are to get through.
1. Income qualifying- The VA has simplified the debt ratios and allows some of the highest DTI, Debt to Income, ratios in the industry. I recently had an approval on a 54% DTI, that is 13% higher than current conventional guidelines.
2. Appraisals- it has to be done by a VA certified appraiser. This is a great benefit to the buyer. The VA has more strict guidelines that protect the veteran/active duty buyer from getting into a home that isn’t safe, hasn’t been maintained well or doesn’t adhere to current “livable” standards.
3. Seller Concessions- the VA offers up to 6% seller paid concessions on purchase transactions. So if you were buying a $280,000 home, the seller could offer $16,800 in concessions to make the deal work. That is obviously a HUGE amount of concessions and I haven’t seen the need for that much but hey it’s available and an option if it really came to that. In addition, almost all purchases currently have some sort of seller concessions to help pay for closing costs. It is just the way the market has moved with all the volatility in the real estate market. Sellers are willing to give concessions away so they can sell the house at all, in this kind of market.
4. 100% financing- best of all no money down financing is still available. Boy, that is when I wish I had access to the VA’s loan program. We had to bring an arm and a leg to close so as to avoid paying mortgage insurance- which also the VA doesn’t have on any of their loans. On VA loans, they charge a funding fee, which goes to guarantee the loan unless you collect disability from the VA and then they waive the funding fee altogether.
5. VA Rates– among the lowest in the country, the VA “specialized” for government loans only offer rates as low as 3.25% today. The best I could get on my own loan was 3.875%.
I hope I have helped to inform and bring up to date what the current market is to allow VA eligible home buyers to buy a house right now.