What Makes a VA Loan in San Diego Great for Veterans?
First off, if you are a current member of the armed services, or a veteran, I want to thank you for your service. Our country would not be as great as it is today without you. Due to your service and sacrifice, you may qualify for a special home loan program that others cannot. The VA loan program is a great tool to help you achieve your homeownership dreams.
What are San Diego VA Loans?
In San Diego, the VA loan program is one of the only home loans that allows you to buy a home with no down payment up to a loan amount of $690,000 or do a cash out refi up to 100% of the home value.
VA loans in San Diego are available through VA approved lenders and San Diego Mortgage Brokers. They are insured by the Department of Veterans Affairs.
The VA loan program allows loan terms of 30 year fixed, 15 year fixed and even 5/1 and 3/1 ARMs.
What are the Eligibility Requirements for a San Diego VA Loan?
In order to be eligible for a VA loan, the borrower must be active duty personnel in the United States military or a Veteran.
Non-veterans are not eligible borrowers on VA loans in San Diego unless they are the spouse of an eligible veteran.
To determine eligibility the veteran would need to obtain a Certificate of Eligibility. In order to qualify to receive the certificate of eligibility the borrower must meet the requirements below.
- Active-duty veterans discharged during WWII or later, without a “dishonorable” discharge.
- Active-duty veterans with at least 90 consecutive days of service during major conflict.
- Peacetime veterans and active duty personnel with at least 180 days of consecutive service.
- Enlisted veterans who entered the military after 1980 or officers who entered the military after 1981 and who have served at least 2 years.
The Certificate of Eligibility lets the lender know that:
- The veteran is eligible for a VA home loan,
- How many times (if any) the veteran has used that eligibility which will affect the VA funding fee, and
- Up to what amount the VA will insure the loan.
San Diego VA Loan Funding Fee
VA Loans do not have mortgage insurance like FHA loans, but they do have an upfront funding fee that can be added to the mortgage amount.
The funding fee is a percentage of the loan amount and is determined by what type of veteran the borrower is, how much of a down payment they have, and if the veteran has used a VA mortgage in the past.
Please refer to the table below:
How Are San Diego VA loan Amounts Calculated?
The 2018 San Diego County VA loan limit is set at $690,000 for a 100% loan to value purchase or refinance, but allows loan amounts greater than that with a down payment or available equity. At RWM Home Loans, we are able to offer VA home loans up to $1.5 million.
Let’s look at an example using a VA loan in San Diego to purchase a home priced at $675,000 based on the maximum loan amount and down payment calculations VA loans require.
Purchase price: $675,000
Down Payment: $32,188
Base Loan Amount: $642,812
VA Funding Fee: $13,820 (based on 2.15% of the loan amount due to the down payment being less than 5% and first time use)
Total VA Loan Amount: $656,632
Qualifying for San Diego VA loans
The VA Loan approval process includes a review of the borrower’s credit history, employment and other factors that show whether or not the borrower can qualify for a VA insured loan.
VA loans are not credit score driven, but a good credit score can help a veteran obtain a better mortgage interest rate. A low credit score is not necessarily a disqualifying factor for a VA Loan in San Diego, but many mortgage lenders have a cut off at a 620 FICO score.
VA Loans have a maximum debt to income ratio of 41%, but if the file is run through an automated underwriting system and receives an approval, then the debt to income ratio can be much higher. I have had files approved at a 60% debt to income ratio.
If you are considering using a VA loan to buy a home in San Diego, it may be a great benefit to utilize my Ready to Move Pre-Approval Process which allows a buyer to be fully underwriter approved prior to getting into escrow. This program allows the buyer to close their purchase in 17 days or less and have the strength of an all cash offer even though they are using a VA loan. Please contact me if you would like more information.
Interest Rates and Closing Costs for San Diego VA Loans
The Veterans Administration does not set interest rates for the VA Loan program.
The interest rates are set by the individual lenders that are offering the San Diego VA Loan program. As stated above, the better credit score a veteran has, the better mortgage interest rate they will receive.
Typically, a credit score of 740 is going to give the veteran the best interest rate. The VA mortgage interest rates are about the same as FHA loans.
The VA does put limitations on what closing costs the veteran is allowed to pay on a VA purchase loan.
They break up the fees as allowable and non-allowable.
Typically, the non-allowable fees are paid by the seller, real estate agent, or mortgage lender. Here are a few of the most common allowable VA closing cost fees:
- 1% origination fee
- Reasonable discount points
- VA appraisal
- Recording fees
- Credit report fees
- Pre-paid items
- Insurances (hazard and flood, when required)
- Flood zone determination
- Title insurance, title examination, title endorsement, title policy, title search
- VA funding fee
Some of the non-allowable fees for a VA Loan are:
- Doc prep, underwriting, loan application, admin or processing fees
- Assignment fees
- Interest rate lock-in fees
- E-Mail, fax, copying, postage,
- Notary fees
- Escrow fees or charges
- Tax service fees
One option that many San Diego Mortgage Brokers and Bankers forget to mention to the veteran is that if no origination fee is charged the veteran may pay non-allowable closing costs up to 1% of the purchase price.
The veteran may also pay a combination of non-allowable fees and origination fee, provided that the combination does not exceed 1% of the purchase price. This can make the veteran’s purchase offer more appealing to the seller.
There are also some fees the veteran may never pay:
- Termite inspection fee for a purchase transaction
- Broker fee
- Brokerage fees or commissions charged by real estate agents or real estate brokers in connection with a VA loan
- Any portion of the seller’s lien(s) or short sale fees
- The cost of required repairs and inspections must be paid by the seller. The VA does not permit the veteran to pay for repairs other than minor termite damage repairs.
San Diego VA Loans allow all closing costs and discount points to be paid by the seller, regardless of the loan amount.
All additional seller contributions are limited to 4% of the lesser of the purchase price or appraised value.
San Diego VA Loans For Refinances
A VA Loan can be a great option for a veteran who is looking to refinance their current loan.
There are VA Streamline options (IRRLs) if you already have a VA loan and full documentation VA refinance options.
The VA loan allows a borrower to do a rate and term refinance up to 100%, combine and pay off a 1st and 2nd mortgage up to 100%, and offers cash out up to 100% loan to value.
If you are an active duty personnel or veteran and have any questions concerning San Diego VA Loans please contact me at 858-829-7186. If you would like to obtain a free interest rate quote from a San Diego Mortgage Broker, please fill out the TruQuote form below.
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