Buying a home in Arizona is a significant life event. The biggest obstacle to homeownership is the high purchase price of a house. Most people do not have the money to pay the entire cost upfront.
Once you own a residential property, you can build equity over time rather than throwing your money away every month on rent. Plus, you get a place to live and the ability to make changes to your home.
What is a VA Home Loan?
There are several types of home loan options that different buyers are eligible for. One kind of home loan is called a VA loan. A VA loan benefits veterans, active-duty military personnel, and surviving spouses when they are attempting to purchase a home.
While a conventional loan has certain requirements for down payments, credit scores, and VA mortgage interest, an Arizona VA home loan program significantly reduces or removes these requirements for eligible borrowers.
Benefits of a VA Loan
The Department of Veterans Affairs wants to make it easier for private lenders to give out loans to eligible borrowers with military service in their background or a surviving spouse.
To this end, the agency subsidizes VA loans so that lenders accrue less financial risk themselves, lowering their standards for qualification.
No Down Payment
Perhaps one of the greatest benefits available to those eligible for a VA loan is the lack of a down payment requirement. As long as the price of the home falls within the Arizona VA loan limits of your county, you do not have to make a down payment. You have the option to make a down payment on VA loans if you would like to lower your monthly payment amount or the total cost of the loan amount.
No Mortgage Insurance
A lower down payment usually signals to the lender that you are a risky borrower. As a result, they will require private mortgage insurance to reduce the risk to the lender. An Arizona VA home loan has no requirement for private mortgage insurance since it is backed by the government.
Lower Closing Costs
Closing costs are another factor that can increase the cost of a loan. While qualified veterans, service members, and surviving spouses will still have to cover some fees like the VA funding fee, the total amount of closing costs are generally lower for a VA home loan.
Lower Interest Rates
Competitive interest rates can be accessible for those with strong credit scores, but they are also possible for eligible veterans, active service members, and spouses. This VA home loan benefit makes homes more affordable and is a significant payment assistance program helping people achieve their dreams of ownership.
How to Know if You Qualify for a VA Loan
Not all members of the armed forces are automatically qualified for Arizona VA loans. You must have either 90 consecutive days of active duty during war, 180 consecutive days of active-duty military service during peacetime, six years of service in the National Guard/Reserves, or be a surviving spouse of someone who died in the line of duty or because of a service-connected disability.
Any active-duty service member or veteran that does not meet these VA loan requirements may not qualify. You will need to obtain a Certificate of Eligibility (CoE) will be needed to prove that you qualify for an Arizona VA loan.
Entitlement refers to the amount of financing you can receive for your home purchase. A full entitlement raises the maximum loan amount that you can receive financing for, while a partial entitlement reduces that number.
Even if the above requirements are not met, such as with discharged veterans, they may still qualify for VA loans. If you were discharged due to a hardship, government convenience, medical condition, service disability, or early out, you could still qualify for this type of loan program.
Decent Credit Score
While you may not need as high of a credit score as you would for a conventional loan, there is still a minimum requirement. Generally, the minimum requirement is 580.
Low Debt-to-Income Ratio
Though there are no official limits for your debt-to-income ratio, most lenders will still want to see that you have the ability to pay your debts. Some lenders may set a maximum of 41% to reduce financial risk for themselves.
Obtaining more than one VA loan during your lifetime is possible if you are an eligible veteran, but you should know that there is typically a three to a four-year waiting period before you can qualify for a new VA mortgage and be approved.
District Lending: Your VA Loan Partner
Helping active-duty military personnel, veterans, and spouses access home ownership in Arizona is very important to our team at District Lending. VA loans work only when recipients understand the details of their loan agreement, a principle that we believe to our core.
Whether you have questions about the down payment, interest rates, funding fee, closing costs, obtaining your Certificate of Eligibility, when to refinance, or your eligibility for the VA home loan benefit, we can put your mind at ease.
Let’s work together to secure a VA loan for your home in Arizona. Contact us today to learn more.