What Are the VA Loan Requirements for Credit and Down-Payments in 2018?

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There are many reasons why VA loan requirements are so attractive to borrowers with military credentials this year. The U.S economy is booming again, the housing market is soaring and eligible VA home loan applicants have access to arguably the best mortgage to refinance or buy a house in 2018. When most people look at buying a home, one of the most important considerations is to compare the types of loans and down payments that are required. Once you start to look at what is available, it is easy to understand why many military members and veterans choose a VA home loan. The 2018 VA loan requirements continue to boast of some of the most attractive credit rules and down payment options for those who qualify for VA financing.

People with past credit problems love that VA loans have No minimum credit score requirements in 2018.

va loan credit

Credit Requirements on VA Loans and Mortgages

Another advantage of VA loan requirements is the flexible underwriting. There is no minimum credit score for VA loans. Many approved VA lenders will have their own credit standards; many require a credit score of at least 620. There are some lenders that will offer VA mortgages at a lower interest rate, but they will want a higher interest rate. If you are looking for a VA loan with 570 credit score, you will need to be talking with the right lending sources. There are a few mortgage companies that will approve VA loans for people with 500 to 600 credit scores, but most companies are looking to offer VA loans to people with credit score at 620 or higher.

The VA program also allows the borrower to use their benefit only one or two years after a bankruptcy or foreclosure. The VA is required to look at the entire credit picture and will not necessarily decline you because of a negative credit event in the recent past.

VA Loans Require $0 Down Payment

Maybe, the most attractive feature of VA loans today is that most who qualify can put no money down and get a mortgage. Plus, there is no mortgage insurance required. By offering a guaranteed zero-money down home loan, the VA is able to provide more flexibility in buying a home than you would otherwise be able to. In the past, many people had to continue to pay rent for years while they saved up 10% or 20% to buy a home. The VA loan program is one of the few mortgage options today that allows 100% financing.

About 90% of VA loan borrowers use 100% financing. But there is an advantage to putting down 5%. If you put down at least that much, your VA funding fee will drop. That fee is usually 2.15% of the loan amount for 100% VA financing. But if you make a 5% down payment, the fee will drop to 1.5%. The fee lowers more if you put down 10%.

VA Down-Payment Requirements More Attractive than Conventional and FHA Programs

We’ve establish that VA loan requirements allow veterans and active military personnel to buy a home with no money down. There are more low-down payment mortgage options today than a few years ago. Today, conventional mortgages are available with a 3% down payment, and others require a 5% down payment. But people who have lower credit scores than 640 may have trouble qualifying for these programs. Having a lower credit score also can result in a higher interest rate.

For borrowers that do not have VA loan eligibility, FHA is a good option for people with lower credit score, and they are available with a 3.5% down payment if you have a 580 or higher credit score. The interest rates on these loans are competitive as well. But you will pay higher than average mortgage insurance premiums. Those premiums also cannot be cancelled in many cases, as can conventional loan mortgage insurance. No money down and no mortgage insurance make 2018 VA loan requirements very attractive.

Income Requirements with VA Loans

Borrowers need to show they have enough income to pay the loan each month. They should not have too much debt, but the VA loan guidelines offer more flexibility than for conventional loans. Underwriters are required to do their due diligence under federal law, but there is more flexibility because this is a government benefit program.

Some Advantages of VA Mortgage Loans

As noted above, VA loans are one of the only loan programs today available with 100% financing. Back before the mortgage crisis, there were many 100% financing loan options, but VA and USDA loans are about the only ones left in 2018.

There are other advantages of VA loans you should be aware of as well. VA loans, like FHA loans, allow the borrower to use gift funds for down payments and closing costs. The gift funds need to come from people who are close to you, such as family or close friends. Lenders will want to see the paper trial for the gift money.

So, you will have to show bank statements or financial statements to show where the money came from. The money will have to be seasoned as well; a relative cannot just send wire you the money just before closing. It will probably have to sit in your bank account for at least 60 days to be able to work for a down payment or closing cost assistance. Most lenders also want to see a letter from the person giving you the financial gift. It will need to include the information of the donor, his or her relationship to you, and legal wording that states no repayment of the gift is needed in the future.

7 Tips to Avoid VA Mortgage Scams

Are you in the military or a veteran? Thinking about using your VA benefit to buy a home? We want to warn you about various VA mortgage scams out there that can rip you off for thousands of dollars. Generally, you should be wary of too good to be true mortgages and refinancing offers that could come in the mail from what looks like the Department of Veteran Affairs. Some of these offers are scams.

For example, in 2013, a retired Air Force colonel had a refinancing deal on a VA loan fall through. The woman claimed that she and her husband responded to a mailer that promised to do a streamline refinance on their current VA mortgage. The offer promised to give them a new loan with a lower rate and with minimal underwriting. Under normal conditions, this type of loan is possible and can be a good financial move, if you are able to refinance at a rate that is at least .5% below what you have now.

Talk to experienced, VA lending representatives about VA mortgage requirements before signing documents that commit you to buy a home.

va mortgage

The couple said the company representative told them that their 30 year fixed rate would begin at 4.75%, which was .75% above the rates at the time. But it would go down every 90 days until it got to 3%, no more than 180 days after closing. The couple paid several thousand dollars but the rates never dropped.

Sadly, this type of scam with VA loans is becoming more common. All veterans and active military should beware of anything they get in the mail that offers mortgage refinancing. Any letter in the mail that is regarding your VA mortgage probably is not from the VA; thousands of mortgage solicitation companies have access to mortgage records which are public record. It is very common for people holding a mortgage to be solicited in this fashion. Some of these are legitimate offers, but some of them may be scams.

Dishonest companies may misrepresent what they are offering, and may pretend that they work with the VA directly. In reality, they are just another mortgage refinance company that may use illegal tactics to get you to agree to a refinance. Here are some tips so you know what to look out for:

  • Be careful to know who is sending you the VA mortgage offer. The VA will never contact you in the mail about your mortgage. Keep this in mind when you read anything in the mail. Letters are designed to look like they are official to make it appear they are from your lender. The company is required to have a disclosure in the letter, but it usually is in tiny type at the bottom and on the back of the letter.
  • Never pay money up front to any company. If a mortgage company is asking you to pay money up front for services to be performed later, you should walk away.
  • Never pay any fees or points that are out of the norm. A good lender only should charge you up to $1000 to underwrite and process the loan. VA appraisals are usually $300 to $500. Anything outside these numbers may not be on the up and up.
  • Choose mortgage terms that fit your needs. It is good to be conservative when dealing with a home loan. A 30 year fixed rate is often the best option. You know exactly what your payment will be each month for many years. If you want to pay more on the loan, you can, but you know what the minimum payment will be for the long haul. It is risky to depend upon an adjustable rate so that you can just have a lower payment for a few years. An ARM is also another way for the mortgage company to come back in three or five years and get you to pay for another refinance.
  • Try and work with VA mortgage companies inside your region. The VA loan company you work with should be licensed in your state, and should be in your city. You want to be able to get customer service easily if something goes wrong. You should have the name and phone number of a licensed loan originator in your town.
  • Know your VA loan benefits well and be aware how the VA protects you. Many veterans do not know what the VA does and does not provide to them. If you are not familiar with the VA home loan program, you can find all the information you need at this link.

Takeaways When Considering a VA Mortgage Loan

Before you respond to any VA loan offer, you should check with other banks and ensure that you have shopped around so you can compare the rate being offered with others.

Military members and retired vets have earned the right to enjoy their VA home loan benefit. But there are unscrupulous companies out there, so make sure you are not scammed.

Current VA Loan Limits 

Technically, there is no limit on how much you can borrow with VA eligibility; you only need to show that you have the income to make the payments. But there is a limit to how much liability the VA assumes; for many parts of the country, the mortgage lenders use the conforming loan limit of $417,000.

2018 VA Loan Amount Limits by State & County
AK ALEUTIANS EAST $679,650
AK ALEUTIANS WEST $679,650
AK ANCHORAGE $679,650
AK BETHEL $679,650
AK BRISTOL BAY $679,650
AK DENALI $679,650
AK DILLINGHAM $679,650
AK FAIRBANKS NORTH $679,650
AK HAINES $679,650
AK HOONAH-ANGOON $679,650
AK JUNEAU $679,650
AK KENAI PENINSULA $679,650
AK KETCHIKAN GATEWAY $679,650
AK KODIAK ISLAND $679,650
AK KUSILVAK CENSUS AREA $679,650 DENVER
AK LAKE AND PENINSULA $679,650
AK MATANUSKA-SUSITNA $679,650
AK NOME $679,650
AK NORTH SLOPE $679,650
AK NORTHWEST ARCTIC $679,650
AK PETERSBURG CENSUS AREA $679,650
AK PRINCE OF WALES-HYDER $679,650
AK SITKA $679,650
AK SKAGWAY MUNICIPALITY $679,650
AK SOUTHEAST FAIRBANKS $679,650
AK VALDEZ-CORDOVA $679,650
AK WRANGELL CITY/BOROUGH $679,650
AK YAKUTAT CITY $679,650
AK YUKON-KOYUKUK $679,650
CA ALAMEDA $679,650
CA ALPINE $463,450
CA CONTRA COSTA $679,650
CA EL DORADO $517,500
CA LOS ANGELES $679,650
CA MARIN $679,650
CA MONO $529,000
CA MONTEREY $615,250
CA NAPA $679,650
CA NEVADA $477,250
CA ORANGE $679,650
CA PLACER $517,500
CA SACRAMENTO $517,500
CA SAN BENITO $679,650
CA SAN DIEGO $649,750
CA SAN FRANCISCO $679,650
CA SAN LUIS OBISPO $615,250
CA SAN MATEO $679,650
CA SANTA BARBARA $625,500
CA SANTA CLARA $679,650
CA SANTA CRUZ $679,650
CA SOLANO $460,000
CA SONOMA $648,600
CA VENTURA $672,750
CA YOLO $517,500
CO ADAMS $529,000
CO ARAPAHOE $529,000
CO BOULDER $578,450
CO BROOMFIELD $529,000
CO CLEAR CREEK $529,000
CO DENVER $529,000
CO DOUGLAS $529,000
CO EAGLE $636,150
CO ELBERT $529,000
CO GARFIELD $679,650
CO GILPIN $529,000
CO JEFFERSON $529,000
CO LAKE $625,500
CO PARK $529,000
CO PITKIN $679,650
CO ROUTT $625,500
CO SAN MIGUEL $625,500
CO SUMMIT $625,500
CT FAIRFIELD $601,450
DC DISTRICT OF COLUMBIA $679,650
FL MONROE $529,000 ST.
HI HAWAII $679,650
HI HONOLULU $721,050
HI KALAWAO $679,650
HI KAUAI $713,000
HI MAUI $679,650
ID BLAINE $625,500
ID CAMAS $625,500
ID LINCOLN $625,500
ID TETON $679,650
MA DUKES $679,650
MA ESSEX $603,750
MA MIDDLESEX $603,750
MA NANTUCKET $679,650
MA NORFOLK $603,750
MA PLYMOUTH $603,750
MA SUFFOLK $603,750
MD ANNE ARUNDEL $517,500
MD BALTIMORE $517,500
MD BALTIMORE CITY $517,500
MD CALVERT $679,650
MD CARROLL $517,500
MD CHARLES $679,650
MD FREDERICK $679,650
MD HARFORD $517,500
MD HOWARD $517,500
MD MONTGOMERY $679,650
MD PRINCE GEORGE’S $679,650
MD QUEEN ANNE’S $517,500
MP NORTHERN ISLAND $524,400
MP SAIPAN $529,000
MP TINIAN $532,450
NC CAMDEN $625,500
NC CURRITUCK $458,850
NC GATES $458,850
NC HYDE $483,000
NC PASQUOTANK $625,500
NC PERQUIMANS $625,500
NH ROCKINGHAM $603,750
NH STRAFFORD $603,750
NJ BERGEN $679,650
NJ ESSEX $679,650
NJ HUDSON $679,650
NJ HUNTERDON $679,650
NJ MIDDLESEX $679,650
NJ MONMOUTH $679,650
NJ MORRIS $679,650
NJ OCEAN $679,650
NJ PASSAIC $679,650
NJ SOMERSET $679,650
NJ SUSSEX $679,650
NJ UNION $679,650
NY BRONX $679,650
NY DUTCHESS $679,650
NY KINGS $679,650
NY NASSAU $679,650
NY NEW YORK $679,650
NY ORANGE $679,650
NY PUTNAM $679,650
NY QUEENS $679,650
NY RICHMOND $679,650
NY ROCKLAND $679,650
NY SUFFOLK $679,650
NY WESTCHESTER $679,650
OR HOOD RIVER $454,250
PA PIKE $679,650
TN CANNON $494,500
TN CHEATHAM $494,500
TN DAVIDSON $494,500
TN DICKSON $494,500
TN HICKMAN $494,500
TN MACON $494,500
TN MAURY $494,500
TN ROBERTSON $494,500
TN RUTHERFORD $494,500
TN SMITH $494,500
TN SUMNER $494,500
TN TROUSDALE $494,500
TN WILLIAMSON $494,500
TN WILSON $494,500
UT SALT LAKE $600,300
UT SUMMIT $679,650
UT TOOELE $600,300
VA ALEXANDRIA $679,650
VA AMELIA $535,900
VA ARLINGTON $679,650
VA CAROLINE $535,900
VA CHARLES CITY $535,900
VA CHESAPEAKE $458,850
VA CHESTERFIELD $535,900
VA CLARKE $679,650
VA COLONIAL HEIGHTS $535,900
VA CULPEPER $679,650
VA CUMBERLAND $535,900
VA DINWIDDIE $535,900
VA FAIRFAX $679,650
VA FAIRFAX INDEPENDENT CITY $679,650
VA FALLS CHURCH $679,650
VA FAUQUIER $679,650
VA FREDERICKSBURG $679,650
VA GLOUCESTER $458,850
VA GOOCHLAND $535,900
VA HAMPTON $458,850
VA HANOVER $535,900
VA HENRICO $535,900
VA HOPEWELL $535,900
VA ISLE OF WIGHT $458,850
VA JAMES CITY $458,850
VA KING AND QUEEN $535,900
VA KING WILLIAM $535,900
VA LOUDOUN $679,650
VA LOUISA $535,900
VA MANASSAS $679,650
VA MANASSAS PARK $679,650
VA MATHEWS $458,850
VA NEW KENT $535,900
VA NEWPORT NEWS $458,850
VA NORFOLK $458,850
VA PETERSBURG $535,900
VA POQUOSON $458,850
VA PORTSMOUTH $458,850
VA POWHATAN $535,900
VA PRINCE GEORGE $535,900
VA PRINCE WILLIAM $679,650
VA RAPPAHANNOCK $679,650
VA RICHMOND INDEPENDENT CITY $535,900
VA SPOTSYLVANIA $679,650
VA STAFFORD $679,650
VA SUFFOLK $458,850
VA SURRY $458,850
VA SUSSEX $535,900 E
VA VIRGINIA BEACH $458,850
VA WARREN $679,650
VA WILLIAMSBURG $458,850
VA YORK $458,850
WA KING $667,000
WA PIERCE $667,000
WA SAN JUAN $483,000
WA SNOHOMISH $667,000
WV JEFFERSON $679,650
WY TETON $679,650

VA Loan Centers in the U.S. by Region:

Honolulu VA Office: Department of Veterans Affairs 459 Patterson Rd. Honolulu, HI 96819

Phoenix VA Office: Department of Veterans Affairs 3333 N. Central Avenue Phoenix, AZ 85012-2402

Denver VA Office: VA Regional Loan Center 155 Van Gordon Street Lakewood, CO 80228

St. Paul VA Office: Department of Veterans Affairs 1 Federal Drive, Ft. Snelling. St. Paul, MN 55111

Roanoke VA Office: Department of Veterans Affairs 210 First Street Roanoke, VA 24011

Cleveland VA Office: VA Regional Loan Center 1240 East Ninth Street Cleveland, OH 44199

St. Petersburg VA Office: VA Regional Loan Center 9500 Bay Pines Blvd. St. Petersburg, FL 33708

Hat Tip: Thanks to Military.com for the details on the VA loan limits. Check out this article from the Washington Post, Veterans Should Be Aware of Mortgage Scams. 

About Bryan Dornan

Bryan Dornan is Chief Editor of RefiGuide.org. Bryan has worked in the mortgage industry for over 20 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. Bryan's continual focus is to promote affordable home-ownership to consumers like you across the United States. Should you have any questions about articles like this, let him know.