Before you speak with a mortgage lender, it’s useful to calculate how much house you can afford on your own. A lender will tell you how much money you qualify for, but you want to make sure you won’t be overextending yourself by determining your budget and what you realistically can afford to spend on mortgage payments each month.

When determining how much house you can afford, you should use the 28/36% rule of thumb, which stipulates that you should not spend more than 28% of your gross monthly income on housing expenses (your salary before taxes) and 36% on your total monthly debt payments.

Your housing expenses are your monthly mortgage payment, which includes:

Principal: The money that you borrowed to purchase your home.

Interest: The fee that the lender charges you to borrow the funds.

Taxes: The property taxes that you’re required to pay the government based on the value of your home.

Insurance: The homeowners insurance that protects your home against any damages.

Association dues: The fee you must pay if your home is part of a homeowners association. Note that if your home is not part of a homeowners association, you will not be required to pay this fee.

To calculate how much home you can afford, you can use the Home Affordability Calculator or do the following calculations yourself:

Maximum Monthly Housing Expenses = (Gross Monthly Income X 28) / 100

Maximum Total Monthly Debt Payments = (Gross Monthly Income X 36) / 100

But, once you’ve determined how much you can afford, be sure to consider the lifestyle that you want to maintain and leave yourself a cushion in case of emergencies.

At Lendia we can help you obtain your Certificate of Eligibility even if you do not have your DD214. Either call us at 949-333-4636 OR find out if you are eligible for a VA Loan online.

What does DD214 contain?

DD214 or the Report of Separation contains information normally needed to verify military service for benefits, retirement, employment, and membership in veterans’ organizations. Information shown on the Report of Separation may include the service member’s:

• Date and place of entry into active duty
• Home address at time of entry
• Date and place of release from active duty
• Home address after separation
• Last duty assignment and rank
• Military job specialty
• Military education
• Decorations, medals, badges, citations, and campaign awards
• Total creditable service
• Foreign service credited
• Separation information (type of separation, character of service, authority and reason for separation, separation and reenlistment eligibility codes)

How can I obtain a copy of DD214?

If you misplaced or lost your DD214 not to worry there are way of obtaining a copy of it.

1. Request the DD214 through a private online company

If you need your DD-214 quick, you might want to consider utilizing an online service that typically charges a fee.

2. Request the DD-214 online

If you don’t need your DD-214 right away, you can request it online directly from the National Personnel Records Center (NPRC). This option allows you to complete the necessary information online through NPRC’s online request system.

3. Request the DD-214 by fax

You can also request DD-214 duplicate copies directly from the National Personnel Records Center (NPRC) by faxing your request to 314-801-9195.

4. Request the DD214 by Mail

Mail a written request for your DD214 to:

National Personnel Records Center
Military Personnel Records
1 Archives Drive
St. Louis, MO 63138

Active duty service members who are not yet separated from service will not have a DD214. Instead they need to supply a statement of service signed by the adjutant (senior officer’s assistant), personnel office, or commander of the unit.

Many buyers don’t realize that they can and should shop around for lenders before choosing one. There can be variations in the interest rates, terms and closing costs that each lender offers, which is why it’s essential to do your homework.

When comparing different lenders, you should ask each one to provide you with a Loan Estimate, which – as discussed above – will spell out the loan terms, projected payments and closing costs for your potential mortgage. This form is provided in a universal format, meaning that it will allow you to clearly see the differences between what each lender is willing to offer you.

However, one crucial factor that is not included in a Loan Estimate is customer service. Getting a mortgage and making payments is not always an easy process. Unfortunately, there may be hiccups along the way, which is why you want a lender that can make the mortgage process as simple and convenient as possible.

The ideal mortgage lender will guide you through each step of the way, make you feel comfortable asking questions and respond with a sense of urgency.

When you are applying for VA Home Loan with Lendia one of the first things we obtain is your Certificate of Eligibility (COE). The certificate of eligibility will provide us with a VA guaranty amount that in most cases is $36,000. It also contains a code referred to as Entitlement Code. Below we explain what the entitlement codes mean and how the entitlement amount dictates how much you can borrow.

The entitlement codes describe the veteran’s specific military service time period which in turn determine the veteran’s eligibility. The table below illustrates what each code represents and the one right under it specifies the time period that the event took place.

Most VA entitlement codes correspond with certain wartime and peacetime date ranges. The VA is very specific – down to the day – on dates of service, and the period in which the service was completed.

Here is more information on time period designations.

Certain VA entitlement codes describe ways in which service members and others are eligible.

Contrary to popular belief, getting prequalified for a loan is not a guarantee that you’ll actually be able to obtain a loan. When you get prequalified, lenders will only estimate your finances based on the information you provide.

On the other hand, getting preapproved for a loan requires a thorough investigation of your finances that includes the verification of your income, assets and credit rating. When you get preapproved for a loan, you are guaranteed that you’ll be able to obtain the loan, assuming your finances don’t change.

A preapproval will tell you exactly how much the bank is willing to lend you and specify the costs of obtaining the loan. Furthermore, getting preapproved will demonstrate to sellers that you’re a serious buyer who is ready and able to buy their home.

The process of obtaining a VA Loan for your upcoming home purchase is very similar to obtaining a standard conventional loan. VA guidelines are less stringent than conventional loan guidelines enabling you to qualify easier for your purchase loan. Lendia has compiled a VA Purchase Loan Checklist below to help you with gathering documents needed for your upcoming VA loan.

As is the case with conventional and FHA loans at Lendia we need to examine income, assets, and credit. Do not worry, you will not need all those items on-hand for the pre-approval. That only takes a few minutes on the phone with a Lendia VA home loan professional.

Documents needed for obtaining a VA mortgage loan

Personal Information

• Your basic information like name, address, and phone number
• Your current address and previous addresses for the past 2 years
• Dates of birth and years of school completed
• Social Security numbers for all applicants for credit check
• Race and Ethnicity information (for government monitoring – requested on all mortgage loans)
• Copy of valid ID such as a driver’s license or government ID
• State where you plan to purchase
• Number and age of dependents

Military Information

• Your Certificate of Eligibility (COE). Your Lendia loan officer can help obtain this for you relatively quick
• Copy of your DD214if separated from the military
• Statement of service from your commanding officer if you are on active duty

Contact us here to get pre-approved or for more information on VA loan documentation requirements.

Employment/Income

• Name, address, phone number, your position and dates of employment for all employers over the last 2 years
• 30 days’ worth of paystubs
• Last 2 years’ W2s and last 2 years federal tax returns (1040’s) with all schedules
• If self employed: Last 2 years federal tax returns (1040’s) with all schedules
• Copies of social security, pension, and/or retirement award letters and corresponding 1099s (if you receive this type of income)
• Divorce decree and settlement paperwork (if applicable)

Assets

• Most recent (2 months) bank statements for checking and savings accounts showing enough money for your down payment (if any) and closing costs (if not covered by the seller)
• Two months statements for any retirement accounts you have (used as reserves)
• Any real estate currently you currently own (if applicable) and if it is will need:
  • Copy of insurance declaration page
  • Copy of property tax bill
  • Copy of most recent mortgage statements (if not paid off)

Property

• Purchase contract accepted and signed by you and the seller
• Appraisal showing a value of at least the purchase price (Lendia will order)
• Name and contact information for the homeowner’s insurance agent you will use
• Name and phone number for the homeowner’s association, if applicable
• A home inspection report is typically not required by your lender, but it’s a good idea to get an inspection
• You must occupy the property after the purchase is complete. No rentals/investment properties allowed
• See the Property Eligibility section below

Credit/Liabilities

• General knowledge of your current credit card, student loan, auto loan, and other credit accounts. Your loan officer will pull a credit report that shows your accounts, but on occasion, the information may be outdated, missing, or erroneous.
• Amount paid each month in child care
• Explanation for derogatory credit (if applicable)
• Bankruptcy and discharge paperwork (if applicable)
• Documentation disproving any erroneous items on your credit report

If you are applying for a VA streamline refinance, your required documentation will be much less. See our VA streamline page.

Types of Properties Eligible for VA Home Loans

• VA home loans are only for eligible properties as defined by VA. These include but may not be limited to:

• New or previously-occupied home purchase
• New home construction or rehab
• Purchase of a single-family home
• Townhouse (VA approved projects only)
• Condominium (VA approved projects only)
• Mobile homes

The property must also meet standards set by VA called Minimum Property Requirements (MPRs). The MPRs provide a basis for determining that the property is:

• Safe, structurally sound and sanitary, and
• Meets the standards considered acceptable in a permanent home in its location

Speaking with an experienced VA loan specialist will give you a good idea if the property you are considering will qualify for VA financing. Get a live VA rate quote here.

There are some buyers who decide that they don’t want to work with a real estate agent, but that is often a huge mistake. A real estate agent will represent you throughout the home buying process to ensure that you find the right home, ask the important questions, make an appropriate offer, have the power to negotiate and receive the necessary disclosures.

Real estate agents take the stress out of the experience by providing buyers with knowledge of the market and skills in the negotiation process. Furthermore, agents’ expertise and skill are provided to buyers without charge.

How is this possible? Well, as a buyer, your agent is only paid a commission if you close on a new home. And the commission that they receive is paid through the purchasing price of the house. So, it’s technically the seller who pays for your representation.

Therefore, the question shouldn’t be: Should you find a real estate agent? It should be: How do you find the right agent?

The way to find a good agent is by asking the right questions. Some questions to ask may include:

• How long have you been working as a real estate agent?
• What makes you different than other agents?
• How many customers/clients are you currently working with?
• What experience do you have finding homes in my price range?
• How knowledgeable are you about my desired area?
• Are you willing to provide me with references?

Real estate agents play a big role in a successful and stress-free home buying experience, so it’s crucial that you find a good one. If you need help finding the right real estate agent, give us a call and we can connect you with a professional agent.

Once you select the best agent for you, he or she will look over your approval letter, discuss your budget and help you set your priorities.

What is the VA Funding Fee?

Most veterans must pay a funding fee to VA at loan closing.  This fee is used to defray the cost of administering the VA home loan program. The VA Funding Fee,
if applicable, may be financed or paid in cash. The fee is imposed on both VA purchase loans and VA refinance loans (VA Streamline Refinance (IRRRL) or VA Cash Out Refinance)

Exemptions from the VA Funding Fee

The following individuals are exempt from the Funding Fee:

1. Veterans that are receiving compensation for service connected  VA disability
2. Veterans who would be entitled to receive compensation for service-connected disabilities if they did not receive retirement pay
3. Surviving spouses of veterans who died in service or from service-connected disabilities (whether or not such surviving spouses are veterans with their own entitlement and whether or not they are using their own entitlement on the loan)
4. Veterans still on active awaiting discharge and who were rated eligible to receive compensation as a result of a pre-discharge disability examination and rating will be considered as receiving compensation as of that date; and
5. Veterans entitled to receive VA compensation for service-connected disabilities, but who are not presently in receipt because they are on active duty.

Documentation must be provided to verify eligibility for exemption and a signed VA Form 26-8937, Verification of VA Benefit-Related Indebtedness, must be completed and reviewed for eligibility of exemption prior to closing.

What are the actual VA Funding Fees?

Lendia broke down the VA funding Fees by transaction type, use type and complied the chart below to help you understand what you VA Funding Fee will be.

Once you’ve determined how much you can afford to spend on a home and found the right agent to help you through the process, you should start to talk to your agent about what your ideal home looks like. During this time, you should consider:

• Location: Which neighborhoods would you prefer to live in?
• Type: Would you like a single-family house, multifamily house, townhouse, condo, etc.?
• Lot: How much land, if any, are you looking for?
• Size: What is your ideal square footage?
• Bedrooms and bathrooms: How many bedrooms do you require? Does every bedroom need its own bathroom?
• Age and condition: Are you willing to do work on the home?

Although your real estate agent will send you listings after you’ve discussed your needs, it’s useful to do a search yourself prior to this conversation. By conducting your own search, you’ll be able to get a sense of what’s available on the market.

You won’t have access to your local Multiple Listing Service, which provides your agent with a full list of all homes currently on the market. However, you can browse homes listed on various websites online, which will allow you to see the many homes on the market and filter the results by price, location, type, square footage, rooms and year built.

As you begin to look at listings, you’ll most likely notice that your perfect home is not available on the market or in your budget. That’s to be expected – after all, it is your ideal home. That’s why it’s vital that you figure out what your priorities are now before you get deeper into your house search.

Determining your priorities really means that you need to decide what you’re willing to sacrifice. Start by asking yourself: Which aspects of a home do I absolutely need and which would I prefer to have?

For example, if you have three children, is it necessary for all of them to have their own bedrooms, or is it more important that the house is close to the best schools?

Finding the best home is all about the give and take, so make sure you know what you’re willing to give up and what’s absolutely necessary to take.

Lendia has compiled a selection of frequently asked questions regarding VA Loans with answers below. Although this list does not cover all questions feel free to give Lendia a call at 949-333-4636 with any other questions you may have.

What can a VA loan be used for?

A VA loan may be used to purchase a primary home or to refinance an existing mortgage loan. When buying, property types include single family homes, town homes or condominiums in VA approved projects. When used in a refinance transaction the borrower can refinance an existing VA loan or  refinance an existing non VA loan.

What are the advantages of a VA loan?

VA Loans have several advantages over other types of loans.

• Purchase Transactions: A VA Loan gives you the ability to purchase a home with no money down (100 percent financing), that is by far the biggest advantage. Although a VA funding fee may be required, an added feature is that there is never any monthly private mortgage insurance (PMI) associated with a VA loan. It is easier to qualify than traditional loans due to more relaxed credit and income guidelines and a VA loan comes with NO pre-payment penalty. In addition Interest rates are generally lower given the VA is backing of the loan.
• Refinance Transactions: VA Loans are extremely flexible when it comes to refinancing. Two great options are offered
  • VA Streamline IRRRL Refinance whereby no appraisal, no income and no assets are needed to complete the refinance. you simply go with this option to lower your rate.
  • VA Cash Out Refinance is the only program that allows you to cash out up to 100% of the value of your home for any reason.

Best of all whether it is used for a purchase or refinance the VA Loan never comes with mortgage insurance or a pre payment penalty.

How do VA loan interest rates compare to other loan types?

Generally, VA loan rates are typically lower than other loan types such as conventional loans. This is due to the fact that the loan carries a federal guarantee against loss that conventional loans do not have. It’s easier to qualify for a VA loan and they come with no private mortgage insurance and no pre-payment penalties.

Is qualifying for a VA loan more or less difficult than other loan types?

VA loan guidelines are more relaxed than conventional loans. Both loans requires income and credit checks and full underwriting approval process but when compared to conventional underwriting requirements and guidelines VA loans tend to have more relaxed or less stringent requirements.

How large of a VA loan can I qualify for?

The amount of loan you qualify for is limited to what you can afford on a monthly basis. Your monthly income, residual income, credit rating, monthly liabilities and  entitlement amount are a mong a few things that are examined when applying for a VA Loan. Check with a Lendia VA Loan Specialist  to find out what you qualify for.

Is there a maximum VA loan amount?

No, there is no maximum loan amount but depending on your county, the maximum loan amount without a down payment and assuming full entitlement, would be $417,000. High cost areas have higher loan amounts. Your entitlement plays a big role in determining your maximum along with the VA county limits.

• For Loan Amounts ≤ $417,000, Lendia’s Minimum FICO Score is 600
• For Loan Amounts > $417,000 and < $1,000,000, Lendia’s Minimum FICO Score is 620
• Lendia Offers Mega Jumbo VA IRRRL with loan amounts as high as $3,000,000. Lendia’s minimum FICO for this program is 640

Does the VA set interest rates?

No, they do not. VA mortgage rates are set by the market but are typically lower than conventional mortgage rates since the loan is guaranteed by the VA. The VA offers an easy, straightforward process for veterans to refinance.

Do I need to occupy the home I am buying?

Yes when utilizing your VA benefit to purchase a home you will be asked to certify that they will occupy the home within 60 days of closing the loan. So you can only use a VA loan to purchase a primary residence.

Can I include any closing costs associated with the purchase of a home into the loan?

No. Closing costs can not be included in the loan amount on a purchase transaction. Lendia offers several programs where we provide Lender credit to cover your closing costs. In a refinance transaction, the required closing costs may be added to the new loan balance.

What effect do credit scores have on my loan approval?

Lendia’s minimum score for a purchase or streamline IRRRL transaction is 600 and 620 for a VA Cash Out transaction. Lower scores are accepted on a case by case basis so it’s best to contact one of our loan officers to get approved.

What if I have credit problems or have in the past?

Lendia will examine your credit history before issuing a pre-approval on your home purchase. Click here for Lendia’s detailed guidelines on VA Purchase Loans.

On VA Streamline IRRRL refinance Lendia only requires a mortgage trade report showing your mortgage payment history and FICO scores. Click here for Lendia’s detailed guidelines on VA Streamline IRRRL transactions

Can the lender use the credit report I pulled off of the internet?

No, Lendia will have to obtain our own credit report and scores when you apply for a purchase or refinance loan. We always recommend that you know your scores and credit worthiness before you apply though.

If I get pre-approved with Lendia, should I stay with the Lendia’s issued pre-approval?

Yes, Lendia will be issuing the loan and disbursing the funds for your loan, the VA does not. Although we do recommend you shop your loan diligently ahead of time we do also recommend that once you get pre-approved with Lendia you limit running your credit everywhere else as that does affect your score. In addition keep in mind that obtaining multiple pre-approvals will require you to redo all elements of the approval process.

What is the VA funding fee and do I have to pay it?

The VA funding fee is collected by the VA on all VA loan transactions. The funding fee is used by the VA to offset claims against the program due to defaults. Veterans that do not meet the exempt requirements are required to pay the funding fee. Find out more about Funding Fees.

Can the VA funding fee be included in the loan?

Yes, the VA funding fee can be included in the loan as long as it does not result in the loan going over the county maximum loan amount for the area the property is located in. Find out more about Funding Fees.

Why is the APR higher than my locked loan rate?

The APR is the cost of your mortgage loan as a yearly rate. The APR is generally higher than the interest rate disclosed on the Promissory Note as it takes into account ALL costs of credit incurred to obtain the loan. The APR includes interest, origination fees, discount points, and other fees you may have agreed to pay in conjunction with the loan. The APR is a good tool for comparison purposes.

What is the maximum allowable VA IRRRL loan size?

Lendia Offers Mega Jumbo VA IRRRL with loan amounts as high as $3,000,000. Lendia’s minimum FICO for this program is 640

Maximum loan amount for a VA IRRRL is the sum of

• Existing VA loan balances plus
• Late payments and late charges, plus
• Allowable fees and charges (includes up to two discount points), plus
• The VA funding fee

Can I change the borrower-of-record with a VA Streamline Refinance?

Generally, the party(ies) obligated on the original loan must be the same on the new loan (and the veteran must still own the property). It is at the discretion of Lendia to require credit qualification in the cases where the obligor changes.

The following table has been provided as a guide to help determine when a change in obligor may or may not be acceptable.  Final determination of the acceptability is at the discretion of Lendia.

An IRRRL is possible in all of the following scenarios: Divorced veteran alone; Veteran and different spouse; and, spouse alone because the veteran died. An IRRRL is not possible for a divorced spouse alone, or a different spouse alone because the veteran died.

Can I use the VA Streamline Refinance for an investment property?

Yes, with Lendia you can use the VA Streamline Refinance for an investment property. You must certify that you previously occupied the property as your primary home. The property does not currently have to be your primary residence. Lendia requires that your FICO score for such a transaction be no lower than 620.

Can I get a VA Loan if I previously modified or restructured my VA loan?

Yes Lendia may offer VA Loans on previously modified or restructured VA Loans on both purchase transactions and refinances as follows:

• The modification/restructure adjusted the terms and /or payment only.
• The mortgage must be current with no lates within the last 12 months

Do I have to be eligible for a better interest rate to qualify for a Streamline Refinance?

• If you are refinancing from a fixed rate mortgage to another fixed rate mortgage then YES your new rate and payment has to be lower – it has to be beneficial to you
• If you are refinancing and decide to get a lesser term but this results in the payment being higher than you current one then that is OK as well.
• If you are refinancing from an adjustable rate mortgage (ARM) to a fixed rate mortgage with a higher rate then that is OK as well since you are moving to a more stable product

Do I have to go through the credit check and appraisal process again when refinancing?

Lendia will pull a mortgage trade report (to check your FICO scores) when you apply for a VA Streamline IRRRL refinance. No appraisal is required on a VA Streamline IRRRL refinance. If you are applying for a VA Cash Out Refinance then Lendia requires a full credit check and an appraisal on those transactions.

Can I get a VA Loan if I previously had a foreclosure?

Yes you can get a VA Loan with Lendia if you previously had a foreclosure. Lendia’s requirements are:

• 2 year seasoning or 24 months gap between your foreclosure and the application date of the new VA purchase loan
• Lendia requires a detailed explanation  with documentation supporting the circumstances that led to the foreclosure.
• Your credit has to be reestablished and you have no late payments on any other credit since the foreclosure
• If your prior foreclosure was on a VA Backed loan Lendia will need to check your Certificate of Eligibility to ensure sufficient entitlement and/or restoration of entitlement.

Can I get a VA Loan if I previously had a short sale?

Yes you can get a VA Loan with Lendia if you previously had a short sale. Lendia’s requirements are:

• No waiting period on getting a new VA Loan from the time of your short sale
• No mortgage lates in the 12 months prior to the short sale
• Lendia requires a detailed explanation  with documentation supporting the circumstances that led to the short sale

Can I get a VA Loan if I had a bankruptcy?

Yes You can get a VA loan with Lendia is you previously had a Bankruptcy according to the following condition:

• A Chapter 7 bankruptcy may be disregarded if discharged more than 2 years ago
• A Chapter 13 Bankruptcy may b disregarded if the following is provided
  • Documentation of debt restructure
  • Most recent 12 months acceptable payment history in accordance to the Ch. 13 Approved Plan
  • Court’s approval to proceed with VA loan
  • If borrower converts a Chapter 13 into Chapter 7 that was subsequently discharged within the past 12 months, then refer to Chapter 7 guidance above.

Do I need my Certificate of Eligibility (COE) for a Streamline Refinance?

No it is not needed since you used your Certificate of Eligibility to get your first VA loan. Lendia can always help obtain it for you regardless.

Can I use VA loans for a no money down mortgage?

Yes. The VA loan allows for 100% financing with no down payment and no mortgage insurance as well.

What are the Most common VA Forms?

Lendia has compiled a list of the most common VA forms for quick reference. Some of the forms are used directly with the borrower when obtaining a VA Loan and some are used internally by Lendia for funding the VA loan.

VA Form 26-0503 – Federal Collection Policy Notice

VA Form 26-0551 – Debt Questionnaire

VA Form 26-0592 – Counseling Checklist for Military Homebuyers

VA Form 26-1802A – HUD/VA Addendum to URLA

VA Form 26-1820 – Report and Certification of Loan Disbursement

VA Form 26-1880 – Request for A Certificate of Eligibility

VA Form 26-8923 – Interest Rate Reduction Refinancing Loan Worksheet

VA Form 26-8937 – Verification of VA Benefits

VA Form 26-8978 – Rights of VA Loan Borrowers

VA Form 26-8261A – Request for Certificate of Veteran Status

VA Form – Loan Comparison

VA Form – Interest Rate and Discount Statement

VA Form – VA Child Care Statement

VA Form – VA Questionaaire