These days getting a VA or FHA loan has become more and more difficult. No longer can you have a 60% debt to income ratio with the intention of buying a home outside your means. Today you are required to include bank statements, current paystubs, and identification. Government requirements have stiffened to necessitate more tangible proof of financial ability from the borrower as well as greater responsibilities of the seller.
Fees and Charges
Veteran Affair and FHA loans keep home purchasers from paying fees often charged by escrow companies, lenders, and title companies. If you’re planning to get a VA or FHA loan ensure you read through the fine print for “non-allowable” fees charged by your lender. The fees will be charged, but should be taken on by the seller as they are disallowed to be paid by the buyer.
You should pre-qualify for a loan before making an offer on a home. As a future home owner it is wise to ask the lender how much the non-allowable fees will be. If you’re working with an experience agent they should have an estimate on non-allowable fees. Because the fees won’t be paid as they would have been with a conventional loan the non-allowable fee information ought to be included in your offer.
VA Appraisal and Inspections
The veteran has the option to pay for a VA appraiser and VA compliance inspector. It is wise to pay for a second appraisal if there is a reconsideration of value. Often times the veteran can request the reconsideration of value, but only if the lender is not requesting a reconsideration of value.
Down Payments
As a first time home buyer the down payment requirement for FHA and VA loans are more favorable than with traditional loans. An FHA loan requires you to come up with 3.5% or less down payment, depending on the loan. This can put home ownership on a much nearer horizon for someone wishing to purchase their first home. A veteran has an even greater benefit in that they don’t have to come up with a down payment at all when using a VA loan. This benefit alone shows the huge advantage of securing a VA loan over most loan programs out there.