Here’s my full conversation with Donna Jo about explaining VA loans.
It seems like a lot of people have misconceptions about VA loans. To help clear up the confusion, I’m talking today with a great lender, Donna Jo Bennett. She knows all the ins and outs of VA loans, so hopefully this conversation will help you understand VA loans like she does.
So Donna, you told me earlier that there were new guidelines regarding FICO scores and VA loans. What are they and how do they work?
Basically, the VA itself has no FICO requirements. Rather, it’s the lenders who set the minimum FICO requirements. Some lenders don’t go below 640. Others go to about 600. However, my team goes all the way down to a minimum FICO score of 540 with zero dollars down.
“You can get a VA loan with no down payment.”
That’s amazing! Does that mean no fees?
Not quite. There are fees, namely, people would only pay closing costs. However, there is no money down. Most first-time homebuyers have to pay 3% down. If they’ve owned a home before, it’s at least 5% down. For our veterans, we offer zero percent down.
This only changes if they’ve already used their entitlement and have an outstanding VA loan. The other catch is if they’ve used their entitlement and went into foreclosure. If either of these situations is the case, we need to move into bonus, or second-tier, entitlement.
I just went through this process with a gentleman who had a home foreclosed on in 1988. He was getting a loan for a $520,000 home, and even with second-tier entitlement, he only had to put $13,000 down. That’s only 2.5%, so it’s still a better option than a conventional loan.
Just so I understand this, if you foreclose with a conventional loan, the forgiveness period is seven years. However, for a VA loan, it never goes away?
That’s correct. Most veterans run into this issue when they let someone assume their VA loan. If that person doesn’t make their payments, the veteran has no recourse, so they may have to pay the difference back to the government.
That seems like really important information to know. I really appreciate you taking the time to talk with me today about VA loans.
Absolutely, I appreciate the opportunity to help people understand VA loans. They can be pretty tricky, so if you’re ever unsure how to handle one, you should reach out to a trusted lender. We can help you navigate VA loans.
If you want to talk to Donna Jo about VA loans, you can reach her at 702-401-1108. If you have any real estate-related questions, please reach out to me or my team. We are always willing to help!
