When purchasing a home with a VA loan, there are a few things that are important to know.
First, you must apply for your Certificate of Eligibility
In order to apply for the certificate of eligibility, you must provide a DD Form 214 for Veterans or a signed statement of service if you are still active. Once a lender has this information, they will know what your eligibility is, and how much your VA funding fee amount will be.
If it is your first time using a VA loan, your VA Funding Fee will be 2.15% of the loan, and 3.3% subsequent times. This can be wrapped into the loan or paid off at closing. Most take advantage of wrapping it into the loan to keep closing costs down.
If you receive compensation or disability from the VA, then the funding fee is waived all together!
When using a VA loan to purchase a home, the lending guidelines are more stringent than with other types of loans.
There is a unique list of Minimum Property Requirements (MRP) that applies to VA loans. These requirements need to be met for the loan to be approved. Some of them may seem silly, but they were implemented to protect you from purchasing a home that could be a potential money pit.
The good news is, some of these MPRs are easily identified when viewing the home.
Easily Identifiable MPRs
- No empty pools
- No broken windows
- Adequate kitchen, bathroom, and living areas
- Must have flooring
- No exposed wires
There are others on the list, but they either aren’t common in Las Vegas or can’t be easily identified when viewing.
Other MPRs that can be found during Inspection or Appraisal
- Roof in good condition
- Home is structurally sound
- No lead-based paint
- No unpermitted additions
- No wood-eating insects, fungus, or dry rot
- Functioning Heating and Cooling
- Functioning Utilities
Another important factor of getting your VA loan approved is the home appraising at the contract price.
One unique aspect of VA appraisers is that they are required to notify the lender of a possible appraisal issue and initiate a Tidewater on the property. When this happens, the lender notifies the
real estate agents that a Tidewater has been initiated.
A Tidewater is designed to help buyers by allowing the parties a chance to rebuttal a low appraisal.
Once a Tidewater is initiated, the agents have a set period of time to provide comps to support the contract price. With other loan types, the lender is just notified that the property did not appraise, and the loan will not be approved at the price.
With VA loans, lenders try to give the buyer an opportunity to still get the house and not lose out on the money spent on the appraisal and inspection.
These are some very important reasons to work with an agent that knows how VA loans work.
It’s also important to know what fees you are not allowed to pay as a Veteran.
Some of these fees will appear
VA Non-Allowable Fees
- Escrow Fees
- Termite/Pest Inspection
- Tax Service Fees
- Notary Fees
- Underwriting Fees
- Processing Fees
- Administration Fees
- Mortgage Broker Fees
- Wire Fees
- Fees for Flood determination
- Fee for 2nd Appraisal
Keep in mind this is just a brief overview of the process and having a lender and a Realtor that know the ins and outs of purchasing a home with a VA loan will ensure the process runs smoothly.