Reader Question: Do I Qualify for a VA Loan?

January 3, 2013 by 4 Comments

I received this question on a comment and thought I’d share my response via a post.

Happy New Year,
I am contemplating a return to the Tri Cities and would like to utilize my VA 0 down loan in the amount of $250,000 or less. My income is based of a civil service pension, social security and VA disability.  The total gross amount I currently receive is $4,400 monthly.   Am i going to be able to qualify for the VA  (or any other)loan?

Thanks in advance,
Greg

VA’s standard guidelines allow for a debt to income ratio of 41%.  This means that Greg’s total monthly mortgage payment and monthly debts should not exceed 41%. 

41% of $4400 is $1804. VA guidelines would probably allow $1804 for total proposed mortgage payment and monthly debts.

The current mortgage payment for a $250,000 zero down VA purchase would be roughly $1422 (including taxes estimated at $260.50 and insurance at $50 per month).  

This is based on rates as of 3:00 pm on January 3, 2012 of 3.250% (apr 3.430) for a 30 year fixed VA loan based on credit scores of 720 or higher. 

The proposed mortgage payment of $1422 less the $1804 allowed monthly debt (for the 41% debt to income ratio) leaves around $382 per month for other possible monthly debts (car loans, student loans,  credit cards, child support, etc.).

So if Greg has less than $382 per month in other debts, he would qualify for a $250,000 home (also assuming taxes and insurance are around what I’ve estimated).

BUT WAIT… there’s more…

If Greg’s social security income may be able to be grossed up by 15%, which would allow him to have a little more “wiggle room” with the amount of monthly debt.

In addition, if he is a disabled veteran, he may qualify to be exempt from the VA funding fee which would  also reduce his payment by about $23.00 (apr 3.261).  This would allow for $400 in monthly debt (not including if the social security income is able to be grossed up) with Greg qualifying for a $250,000 home in the Tri Cities.

If you are interested in applying for a VA, FHA or conventional loan for a home anywhere in Washington state, please click here.

Filed Under: VA Mortgage Loans Tagged With: , , , , ,

2013 VA Loan Limits for homes in Washington State

December 13, 2012 by 2 Comments

VA has published the loan limits for 2013.  The loan limits listed below are not the maximum loan amounts that an eligible veteran may borrower; the loan amounts below are used to calculate the VA’s maximum guaranty amount in a specific county.  

King, Pierce and Snohomish Counties went up a little while San Juan County was adjusted slightly lower. VA loan limits are based on the county’s median home values as estimated by FHA (Federal Housing Adminstration).


King County: $500,000

Pierce County: $500,000

San Juan County: $468,750

Snohomish County: $500,000

All other counties remain at $417,000

This means that in King County, a qualified Veteran can finance a home with zero down with a sales price up to $500,000.   

Any sales price/loan amount above this amount is considered a “VA Jumbo”.  VA does not have a loan limit for VA jumbos, however most lenders have “overlays” limiting loan amounts for VA Jumbos.  VA Jumbos allow the Vet to buy a home with reduced down payment. A simple formula to estimate the minimum down payment required is sales price minus loan amount x 25% = minimum down payment.

For example, home in Seattle with a sales price of $600,000 would have a down payment requirement of $25,000 for an eligible veteran.  $600,000 sales price less the $500,000 loan limit = $100,000. $100,000 x 25% = $25,000.

If you’re considering a VA mortgage loan to buy or refinance a home located anywhere in Washington state, I’m honored to help you.

Related post on VA Funding Fees

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VA Loan Limits from August 6, 2012 to December 31, 2012

August 17, 2012 by 1 Comment

VA has issued Circular 26-12-7 increasing loan limits for VA loans closed through the end of the year in the following Washington state counties:

King, Pierce and Snohomish: $498,750

San Juan: $470,000

All other counties remain at $417,000

This means that in King County, a qualified Veteran can finance a home with zero down with a sales price up to $498,750.  With that said, some lenders are still reviewing this recent change and are evaluating whether or not they will recognize the new increase or keep loan limits are their current level. 

Any sales price/loan amount above this amount is considered a “VA Jumbo”.  VA does not have a loan limit for VA jumbos, however most lenders have “overlays” limiting loan amounts for VA Jumbos.  VA Jumbos allow the Vet to buy a home with reduced down payment. A simple formula to estimate the minimum down payment required is sales price minus loan amount x 25% = minimum down payment.

Right now, as of publishing this post, I’m quoting 3.375% for a sales price of $400,000 (apr 3.557) with zero down payment. The seller can pay closing cost and prepaids up to 4% of the sales price. There is no mortgage insurance, however VA loans do have a funding fee which can be financed.

If you are selling a home, please consider buyers who are preapproved for VA financing. It’s a great program benefiting those who have served our country.

Filed Under: VA Mortgage Loans Tagged With: , , ,

VA Loan Limits for 2012 for Homes in Washington

December 6, 2011 by Leave a Comment

NOTE:  VA loan limits have been raised for the remainder of 2012 in certain counties per VA Circular 26-12-7. Click here for more information.

Below are the loan limits for VA loans in Washington State for 2012 which have reduced loan amounts for the “high balance” areas from 2011. Congress may still impact these loan limits and if so, I will update this post.

  • King, Snohomish and Pierce Counties:  $458,850
  • San Juan County: $432,400
  • All other counties in Washington state: $417,000

VA loan limits work differently than conventional or FHA insured mortgages. If a Veteran elects to purchase a home with a sales price higher than the loan limit, they’re down payment is 25% of the difference between the loan amount above and the sales price. This may be changing in 2012, from VA’s website:

2012 loan limits:  The procedure for calculating loan limits for 2012 has changed from 2011.  VA’s previous procedure expires December 31, 2011.  If Congress passes legislation permitting VA to calculate maximum guaranty as it has in the past, the numbers below could increase slightly; they will NOT decrease.  If that occurs, we will post announcements and reissue this loan limit chart.

Lenders have various limits as to how large of a VA loan they’ll fund.  This is one reason why it’s great to work with a company like Mortgage Master Service Corporation where we have several sources for government loans.   If I can provide you a quote for a VA loan on a home located in Washington state, please contact me.

I will keep you posted as soon as we have more information regarding the possible changes in 2012 VA loan limits and/or how they are calculated.  To stay up to date about topics like this, subscribe to my blog in the upper right corner.

Filed Under: VA Mortgage Loans Tagged With:

VA Funding Fees…what briefly goes down, must quickly come back up.

November 25, 2011 by 1 Comment

Well the lower funding fees we thought we had were officially taken away when the President signed HR 674 raising the funding fees effective for VA loans closed November 22, 2011 through September 30, 2016.  The following is per Circular 26-11-19.

VA Funding Fees for Veterans 

First Time Use

Downpayment:

  • Less than 5%*:  2.15%
  • 5% but less than 10%:  1.50%
  • 10% or more:  1.25%    

Second and Subsequent Use

Downpayment:

  • Less than 5%*:  3.30%
  • 5% but less than 10%:  1.50%
  • 10% or more:  1.25%

VA Funding Fees for Reservist/National Guard 

First Time Use

Downpayment:

  • Less than 5%*:  2.40%
  • 5% but less than 10%:  1.75%
  • 10% or more:  1.50%    

Second and Subsequent Use

Downpayment:

  • Less than 5%*:  3.30%
  • 5% but less than 10%:  1.75%
  • 10% or more:  1.50%

Interest Rate Reductions (IRRL) are remaining at 0.50%.

I am happy to help you with your VA loan for your home located anywhere in Washington State.  A heartfelt thank you to those who have served our country.

Filed Under: VA Mortgage Loans Tagged With: , ,

Refinancing Your Seattle Area “High Balance” Mortgage Over $506,000

October 4, 2011 by Leave a Comment

If you obtained a high balance mortgage over the current limit ($506,000 in King, Pierce and Snohomish Counties) and missed the opportunity to refinance before the loan amounts were reduced, you may still have some options worth checking out. Especially with Fannie Mae hinting that loan limits may be reduced further in just a few months, effective January 1, 2012. FHA loan limits may be further reduced in 2012 as well. We typically learn what 2012 limits will be in November.  The gap between yesterday's higher loan limits and conforming/FHA loan limits may actually widen in a few months making most of these scenarios tougher to obtain in 2012.

Conventional Financing

Consider a Jumbo/Non-Conforming Mortgage. Fixed rates or adjustable rate mortgages may be worth your consideration depending on your financial plans. Non-conforming mortgages are for well qualified borrowers and require a minimum credit score of 720 and a maximum loan to value of 80%. Loan amounts of $506,001 and higher are now considered a jumbo in King County as well as Snohomish and Pierce.

Cash In Refinance. Not happy with how your investments are doing in the stock market? Some home owners are electing to use their savings or investments in to bring their principal balance down to the conforming loan limit.

Piggy Back Second Mortgage.  We currently are able to go up to 85% of the appraised value with a second mortgage.  The loan amounts can be structured to keep the first mortgage at 80% of the loan to value and/or at the county high balance conforming limit. Home owners need to be well qualified with credit scores of 720 or higher.  HELOCs and amortized fixed rates are available.

FHA Loans. If your existing mortgage is an FHA loan, you may be in luck. Although FHA loan limits were reduced on October 1, they are allowing streamline refinances of the former temporary higher loan limits.  UPDATE: FHA LOAN LIMITS FROM NOV 18, 2011 – DECEMBER 2012 ARE $567,500 IN KING, PIERCE AND SNOHOMISH COUNTY.

VA Mortgage Loans. Unlike conforming and FHA loans, VA elected to not reduce their loan limits (technically the guarantee) for the remainder of 2011.  

With mortgage rates at a historic lows, it may be worth your time to contact a licensed mortgage originator to review your options. Whether or not you should refinance depends on your personal goals and financial scenario.  If your home is located anywhere in Washington, I'm happy to provide you detailed written rate quotes with no obligation.

Filed Under: Fannie, Freddie and FHFA, FHA, Refinance, VA Mortgage Loans Tagged With: , , ,

VA Funding Fee to be Reduced Effective October 1, 2011 [UPDATED: NOT!]

September 21, 2011 by Leave a Comment

UPDATE: VA Funding Fees were only briefly reduced.

NOVEMEBER 8, 2011 UPDATE: VA Funding Fees are in a political tug-of-war. Per Circluar 26-11-17:

3. Possibility of Congressional Action.  VA believes it is highly likely that Congress will pass a bill keeping funding fees at their present level. 

Stay tuned. I was surprised to see that the fees were reduced when others are jacking fees up. 

VA mortgage loans that close on or after October 1, 2011 will have reduced funding fees except for IRRL (Interest Rate Reduction Refinancing Loan) transactions, which will remain unchanged at 0.50%.  A qualified Veteran with less than 5% down payment, using this benefit for the first time will see the funding fee drop from 2.15% to 1.40%. At a time when it seems many mortgages, like FHA and USDA, are increasing their mortgage insurance fees, it's nice to see VA do something that may have a positive impact.

Here is the VA Funding Fee table from Circular 26-11-12.

VAFundingFee

Also unlike conforming and FHA insured loans, VA is not restructuring their loan amounts.  In King, Pierce and Snohomish County, an eligible service person can purchase a home with zero down payment up to $500,000 with a VA mortgage loan.

If you are selling a home, be sure to consider VA buyers — especially considering that FHA and conforming loan limits are reduced.  VA loans are just as easy to close as a conforming loan.  Real estate agents, please don't steer sellers away from these transactions.  Why exclude any buyer in this (or any) market?

Filed Under: VA Mortgage Loans

October Brings Few Treats for Mortgages

August 31, 2011 by Leave a Comment

MortgagePorterOctoberEffective October 1, 2011, several changes are set to take place that will impact new mortgages, including Conforming, FHA and USDA loans. These changes will impact home buyers, home owners considering refinancing and some who are trying to sell their homes.

[Read more…]

Filed Under: Fannie, Freddie and FHFA, FHA, USDA, VA Mortgage Loans
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