Countless veterans and active military personnel are eligible for 100% VA financing in Massachusetts. Even though some veterans may have already used their VA home benefits in the past, they can still use the program again by utilizing remaining or restored loan entitlement. Below we will discuss all the basics for the regular VA purchase, VA Jumbo and VA Refinance programs.
Explaining VA Guaranteed Loans:
These loans are made by approved banks, lenders, mortgage brokers and savings and loans companies. VA’s guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms and low-interest rates. The amount of guaranty on the loan depends on the loan amount and whether the veteran used some entitlement previously.
VA Home Loan Uses:
- To purchase a home, including townhouse or approved condominium.
- To purchase and improve a home.
- To refinance an existing home loan regardless of loan to value thanks to the streamline refinance program. Eligible vets can also do a 100% cash out refinance to help pay off higher interest debt, or home improvements.
VA Loan Benefits in Massachusetts:
- 100% financing and no down payment for the regular VA loan (VA Jumbo loans require down payment as outlined below) VA and USDA home loans are the only programs in MA that still allow zero money down.
- Fix 15 and 30-year terms, along with adjustable rate terms.
- No PMI or monthly mortgage insurance.
- Limitation on what closing costs buyers can pay.
- Vets have the right to prepay loan (move/sell) anytime without penalty.
- Closings in as little as two weeks.
VA Jumbo Loans:
VA Jumbo mortgages are great for Vet’s purchasing property in more expensive locations like Boston, Worcester, Salem, etc. The program allows for high-cost loan amounts up to $1,500,000 – far greater than the regular “conforming” VA purchase program. Please see the regular VA loan limit chart below. Most of the program requirements for the Jumbo loan are essentially the same, with the exception of the down payment. Vets will need a small down payment for any amount that exceeds the base VA loan limits. Please read the complete VA Jumbo Guide here for down payment examples and scenarios.
Vet’s can also read about other 95% Jumbo Financing options.
Regular 2020 VA Loan Limits below. NOTE *VA Jumbo Limits go up to $1.5mil.
Vet’s That Are Eligible To Use The Program?
Veterans with active duty service, that was not dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940, to July 25, 1947), Korean conflict (June 27, 1950, to January 31, 1955), and Vietnam era (August 5, 1964, to May 7, 1975) veterans must have at least 90 days’ service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days’ active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16, 1981, must in most cases have served at least 2 years.
Persian Gulf Conflict. Basically, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible. VA regional office personnel may assist with eligibility questions.
Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible. The expanded eligibility for Reserves and National Guard individuals will expire October 28, 1999. Contact the local VA office to find out what is needed to establish eligibility. Reservists will pay a slightly higher funding fee than regular veterans.
What About Vet’s That Have Already Used VA?
Great news, there is no cap on the number of times a veteran can use the VA loan program. Using a VA loan two or three times requires looking into a borrower’s remaining VA Loan entitlement. What is entitlement? All veteran and active service members who meet the VA’s eligibility standards have “entitlement” This entitlement is the specific amount Veterans Administration pledges to repay to a lender if the borrower defaults on their loan.
Restoring VA Entitlement:
Veterans can have previously-used entitlement “restored” to purchase another home with a VA loan if:
- The property purchased with the prior VA loan has been sold and the loan paid in full, or
- A qualified veteran-transferee (buyer) agrees to assume the VA loan and substitute his or her entitlement for the same amount of entitlement originally used by the veteran seller. Remaining entitlement and restoration of entitlement can be requested through the nearest VA office by completing needed forms.
- The entitlement may also be restored one time only if the veteran has repaid the prior VA loan in full but has not disposed of the property purchased with the prior VA loan.
VA Appraisal – Certificate of Reasonable Value:
The CRV (certificate of reasonable value) is based on an appraiser’s estimate of the value of the property to be purchased. Because the loan amount may not exceed the CRV, the first step in getting a VA loan is usually to request an appraisal. The lender will generally be the party to request the CRV / appraisal once the home buyer is under contract to purchase. It is important to recognize that while the VA appraisal estimates the value of the property, it is not an inspection and does not guarantee that the house is free of defects. Homebuyers are encouraged to hire a reputable home inspection firm to help in your city. VA guarantees the loan, not the condition of the property.
VA Loan Application Process:
The application process for VA financing is no different from any other type of loan. In fact, the VA application form is the same as that used for FHA, USDA, and conventional loans. The mortgage lender verifies the borrower’s income, assets and obtains a credit report to see that other obligations are being paid on time. If all is well and the appraised value of the property is enough to cover the loan needed, the lender will schedule the closing.
Requirements for Massachusetts VA Loan Approval:
- The applicant must be an eligible veteran who has available entitlement.
- The veteran must occupy or intend to occupy the property as a home within a reasonable period of time after closing the loan. VA does recognize that some service members will be deployed, etc at the time of closing.
- The veteran must be a satisfactory credit score, 620 is the minimum required by most mortgage companies.
- All applicants on the loan must show stable income to meet the housing payments, and satisfy other debt obligations. An experienced VA lender will be able to discuss specific income and other qualifying requirements.
Costs of Obtaining a VA Loan:
See the funding fee chart below. The funding fee for loans to refinance an existing VA home loan with a new VA home loan to lower the existing interest rate is 0.5 percent. For all VA home loans, the funding fee may be paid in cash or it may be included in the loan (most common way) Disabled Vet’s are often exempt from paying any funding fees.
Other VA Closing Costs:
Reasonable closing costs may be charged by the lender. These costs may not be included in the loan. The following items may be paid by the veteran purchaser, the seller, or shared. Closing costs may vary among lenders and also throughout the nation because of differing local laws and customs.
- VA appraisal
- Credit report
- Loan origination fee (usually 1 percent of the loan)
- Discount points
- Title search and title insurance
- Recording fees
- State and/or local transfer taxes, if applicable
- Limited commissions, brokerage fees or “buyer broker” fees may be charged to the veteran buyer.
Questions about the VA loan process? Please call VA Mortgage Hub 7 days a week at Ph: 800-743-7556