About Massachusetts VA Guaranteed Home Loans
The purpose for the Massachusetts VA home loan program is to help eligible veterans and surviving spouses in Cape Cod finance the purchase of homes with competitively lower mortgage interest rates, closing costs and required down payment.
With regards to the Massachusetts VA Home Loan Program, the term “veteran” includes certain members of the Selected Reserve, active duty service personnel and certain categories of spouses.
Primary Benefits of the VA Mortgage Loans
- No PMI (Private Mortgage Insurance) premium required.
- No down payment as long as the sales price doesn’t exceed the appraised value.
- Closing costs may be paid by the seller.
- VA rules may limit the amount you can be charged for closing accounts.
- The lender cannot charge you a penalty fee if you pay the loan off early.
- You don’t have to be a first time homebuyer.
- You can reuse the benefit.
About The “Guarantee” Provided By The VA:
According to the Department of Veterans Affairs home loan website:
QUOTE:VA helps Service members, Veterans, and eligible surviving spouses become homeowners. As part of our mission to serve you, we provide a home loan guaranty benefit and other housing-related programs to help you buy, build, repair, retain, or adapt a home for your own personal occupancy. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms.
What this basically means is that the VA is insuring the loan made by bank or mortgage lender to the VA Eligible borrower against default in the case of when the borrower is not able to continue making mortgage payments as agreed.
This “Guaranty” provided by the VA to mortgage lenders helps keep rates, closing costs and down payments lower as well.
Massachusetts VA Guaranteed Home Loan Background
VA offers a variety of home loan guaranty programs for Active Duty Service members, Veterans, and National Guard and Reserve members.
The Massachusetts VA Home Loan Program was established in 1944 as Servicemen’s Readjustment Act. This bill was passed with the intent to assist eligible veterans with funding for purchases.
The Massachusetts VA was then required to guarantee a portion of the loan for a farm, home, and even a business loan. The very first major amendment to the original program was in 1978, and was with the Veterans Housing Benefits Improvement Act and this made a great impact, increasing the number of qualified veterans for the VA Home Loan.
The program was revised again in the early 1990’s. The revision eliminated the requirements of specific dates of duty that qualified veterans for the program. In addition to this revision, Reservists and National Guard members also became eligible as long as they have been on active duty for at least 6 years.
Based on statistics, more than 18 million veterans were insured by the Veteran’s Administration over the history of the VA Home Loan Program.
An analysis of an estimated number of 24 million living veterans, and out of that number less than 10% have actually been able to take advantage of the VA Home Loan benefits.
With all the additional benefits and advantages of the program, it is still showing that about up to 20% of veterans are not yet made aware of the benefits of the VA Home Loan program and how it works, as well as the advantages.
Cape Cod VA Home Loan Eligibility:
If you are a veteran, in the Reserves, a National Guard, or even a surviving spouse of a veteran you may be eligible for a VA Guaranteed Home Loan.
Please keep in mind that you must have sufficient income, suitable credit, along with a Certificate of Eligibility (COE) in order to be considered eligible for a VA-guaranteed Home Loan. This must also be a primary home to you.
VA Eligibility status is provided by the VA in the form of a Certificate of Eligibility (COE), keeping in mind that the length of your service or service commitment and/or duty status may determine your eligibility for specific home loan benefits. A Veteran may be able to obtain a Certificate of Eligibility from the VA if they meet one of the following requirements:
- Served 90 consecutive days during wartime.
- Served 181 days during peacetime.
- Served more than 6 years in the National Guard or the Reserves.
If you meet one of the criteria above, you may be able to obtain your Certificate of Eligibility to prove your veteran status. Additionally, spouses of veterans may be able to qualify for a VA home loan if their spouse was an active-duty service member killed in the line of duty or if their spouse passed away due to service related disability.
VA Home Loans can be used to:
- Buy a home or a condo in a VA-approved project.
- Build a home.
- Purchase and improve a property at the same time.
- Improve a home with energy-efficient upgrades.
- Buy a manufactured home and/or lot.
VA Home Loan Occupancy Requirements
-The Occupancy Requirements are when borrowing a VA mortgage, the borrower must also meet the occupancy requirements.
-VA mortgage occupancy requirements state that the borrower must reside in the home as a primary residence.
-The borrower must also take residence in the home within a reasonable amount of time after closing out the loan.
-A reasonable amount of time is considered to be within two months from the closing of the loan.
-However, this requirement can be extended until certain circumstances typically due to your required service in the military. Ask your lender about extension options if you will not be able to take primary residence in your new home within the two month time frame.
According to the VA Lender’s guidelines, these are the many different property types that may be eligible for purchase with a VA Home Loan:
- 2-4 unit homes
- Attached townhomes must be VA approved projects.
- Single family homes must not be connected.
- Mobile homes/Manufactured homes must come with permanently affixed land, and of about at least 20 feet in width and 700 square feet if it is double in width.
To be able to qualify a home for a VA Loan, you must intend for the particular home to be your primary residence. Rental properties, second homes, or an investment property would not be considered as a qualified home.
However, you may be able to qualify a 2-4 unit property for a VA Loan, as long as you live in one unit of the home and rented out the rest.
*Please also take into consideration that the home must meet Minimum Property Requirements (MPRs), this is a part of the standard condition requirements that is expected to meet.
Credit Scores/History Requirements
Professional lenders may require at least a minimum credit score of 620 or higher, the VA however does not have a minimum credit score requirement.
Required Documents
Listed below are documentations that you may need to provide in the process of approval:
- In order to confirm your household income, copies of your W2 statements for the past 2 years may be required in order to do so.
- Copies of your 2 most recent pay stubs,if you are currently employed.
- If you do have other assets such as; a savings account, checking account, financial investments, trust funds, etc. you may need these documents as well.
- For self-employed veterans, you may need to present 2 years of consecutive tax returns as well.
- A copy of your DD 214, also known as Certificate of Guarantee.
Massachusetts VA Home Loan Appraisal Guidelines
VA home loans require that you must do an appraisal on your property before the property can be approved for the VA mortgage program.
When a VA approved previews the subject property, they are taking into consideration Safety, Sanitation, and Structural Integrity (three S’s). Your home must meet requirements in each of these three areas in order to pass the VA appraisal inspection. To help you understand the VA’s top ten minimum property requirements, please take a look at the following overview:
- The Home must have a connection to a community water system unless it is not available. If water wells are required to be used, the well water must meet federal water standards.
- The home cannot be located in an area that a utility or energy company has an easement on for gas, petroleum, and high voltage electricity lines.
- The home must show acceptable levels of lead in paint.
- The property must not consist of any termites.
- Direct access to the home’s living room area cannot be blocked in any way. Meaning that the owner must be able to enter their living room area without having to cross through someone else’s first.
- Crawl spaces must not contain debris and must have proper ventilation.
- No defective or leaking roofs.
- The home must have a proper heating system. This includes a backup heating source in the event that solar heating fails and also a traditional heating system to prevent pipes from freezing in older homes.
- All mechanical systems must be in working order without any foreseeable problems. Examples of mechanical systems includes; heating and cooling systems, etc.
- The home cannot be an investment property or a space used primarily to operate a business. If a borrower does not choose to operate a business within the home, the space used for this business cannot exceed 25% of the home’s floor space.
These appraisals are typically a bit stricter than the conventional home loan program because The Department of Veterans Affairs wants to ensure that you do not end up in a money-pit of a house, as well as to ensure safety within your new home.
Debt-to-Income
The Debt-to-Income (DTI) ratio required should be below 41% of your monthly income. A DTI is the percentage of your total monthly income that you use towards expenses such as; credit card bills, car payments and other bills considered as debt. To get this ratio, you must divide your monthly debt payments by your total monthly gross income and then multiply this number by 100.
For example, if your annual income is $60,000, divide this amount by 12 to get your monthly earnings, that is $60,000/12 = $5000.
**You may be eligible for a VA loan if the percentage you came up with is 41% or less!
Massachusetts VA Guaranteed Home Loans
