Housing prices in Colorado are exponentially increasing each year leaving many people left out of homeownership. With six military bases in our state alone, our population of active military personnel will need housing in this market that is not only affordable in price but can be affordably financed. Fortunately, VA loans can be the key to homeownership and are the most beneficial mortgage products on the market right now.
What is a VA Mortgage?
Although made by commercial lenders, a VA loan is partially backed by the Department of Veterans Affairs. The benefits of a VA mortgage are the lower interest rates, no money down requirements and more lenient credit and income requirements.
Who Can Qualify for a VA Mortgage?
Certificate of Eligibility (COE) qualification for a VA mortgage is extended to active members of the military, military veterans, reservists, National Guard and spouses of military members who died while on active duty or as the result of a service-connected disability.
An active duty member can typically qualify after approximately six months of service whereas reservists and National Guard must wait six years before they can apply unless they are called to active duty. Once a COE has been acquired, a borrower can then shop for a VA loan.
What are the Requirements for VA Mortgage Approval?
Because each lender can vary in underwriting criteria, VA mortgages can have small variations in the individual institution’s underwriting guidelines. But for the most part, underwriting guidelines for a VA loan are far more lenient than a conventional mortgage. Here is where those requirements differ substantially:
- Property requirement — a VA loan requires that you will occupy that property as your primary home. A conventional mortgage can finance primary, secondary or even investment properties
- Down payment — the VA requires no minimum down payment whereas conventional loans require various minimum down payments depending on the loan type and terms.
- Fees to close — there is a limitation on closing costs paid by a buyer with a VA loan with sellers able to pay any of a buyer’s closing costs up to 4 percent as concessions.
- No credit score requirements by the VA although lenders may impose their own requirements.
- More lenient income requirements.
- Lower interest rates.
- No mortgage insurance payments.
- No prepayment penalties
- VA foreclosure avoidance that advocates for borrowers in order to find alternatives to foreclosure.
Mortgage lenders are attracted to VA loans because they are backed by the federal government. This ensures that the lender will not lose money should that borrower default on the mortgage.
Call a Professional
At Front Range Mortgage, we are specialists when it comes to VA mortgages in Colorado. We are grateful for our proud military and their service to our country and have dedicated ourselves to helping military borrowers get the mortgage financing they need and deserve. Contact us in Colorado Springs at (719) 540-2020 or in Denver at (303) 500-1900 to talk to one of our loan specialists to see if you qualify for a VA loan.