HomeLander Mortgage

Tag: veteran home loan

  • VA Home Loans – New Construction Guidelines for 2022

    VA Home Loans – New Construction Guidelines for 2022

    VA Loans are available to veterans who have served in the armed forces, reservists/national guard, or an eligible surviving spouse. The Department of Veteran Affairs insures these types of mortgage and loan products. 

    Borrowers must have a Certificate of Eligibility (COE) issued to them, which proves they officially meet the minimum military service requirements. Additionally, this type of loan is only available through specific VA-approved lenders. With the VA guarantee, lenders are protected against a percentage of the loss if the borrower defaults.

    A VA loan is most commonly used for home purchases, but it can also be used as a construction loan program when building a home from the ground up. Borrowers can also use the loan to purchase an existing home and renovate it.

    VA one time close construction loans are advantageous as they often include: 

    • No down payment
    • Low interest rates
    • No mortgage insurance required

    Veterans and service members can qualify for a VA construction loan with a credit score as low as 620 and a higher debt-to-income ratio than allowed for a conventional construction loan.

    Many veterans are also exempt from paying the VA funding fee with a service-related disability.

    A VA construction loan is paid out in installments to the builder as various milestones in the project are met during the construction process. 

    VA registered builders can be used with the VA construction loan program. 

    In 2022, the latest guidelines include that borrowers need to meet the following guidelines. 

    While VA guidelines do not specify that borrowers have a minimum credit score, the VA one time close construction loan does require the veteran to have at least a 620 minimum credit score to qualify.

    Borrowers’ debt-to-income ratio (DTI) can be flexible if the veteran meets the VA residual income guideline.  

    Borrowers need to meet income requirements based on family size. 

    Property requirements include: 

    The finished home must be used for the veteran’s and/or family members’ primary residence.

    Eligible property types are single-family homes, modular, and multi-width manufactured homes.

    The total loan amount for construction costs/the permanent mortgage must not exceed the county loan limit of $647,200 set for 2022.

    As the VA doesn’t lend money directly, borrowers need a lending institution that offers the VA loan program. HomeLander Mortgage can help with your VA one time close construction loan.

    For more information on how the process works, please visit HomeLanderMortgage.com. HomeLander Mortgage specializes in these types of loans and is able to navigate the process. Schedule a call to begin the process at www.homelandermortgage.com

  • Yes, We Have Construction Loans for Veterans

    Yes, We Have Construction Loans for Veterans

    Veterans who retire from military service, active duty service members, and members of the National Guard and Reserves often can qualify for VA Construction Loans to help them build and finance a home from beginning to end. The VA Construction Loan is also known as the VA One-Time Close Loan (OTC) for a reason. This type of loan product allows qualified borrowers the ability to construct their own homes utilizing an all-in-one lending product. 

    The VA One-Time Close Construction loan program delivers interim construction financing, land purchase (or payoff), and the permanent mortgage loan – all wrapped into one. A single loan offers both the construction loan and the permanent mortgage within a single loan closing. This type of loan also allows veterans to lock in their interest rate at the time of approval before construction begins, and this rate is good until it converts to a permanent loan.

    Borrowers only need to qualify once. Instead of providing qualification documents such as pay stubs and tax returns twice, with this type of loan, veterans only have to prove that they can pay the construction loan and mortgage once.

    Importantly, since conventional mortgage loan closing costs can be a significant expense to borrowers, the ability to just close one loan saves thousands of dollars having to close a second time. A traditional construction loan usually requires two sets of appraisals – by separate appraisers. With a one-time close construction loan, one appraisal saves the borrower money. 

    In summation, since the permanent loan is closed before construction begins, there is no need for re-qualifying for financing when it comes time to move on from construction to the permanent loan. This also means that there is no need for re-appraising, there’s only one underwriting process, and one set of closing costs. As such, this loan product provides interim construction financing, lot/land purchase or payoff, and the mortgage loan all in one.

    In order to obtain this type of loan, qualifying veterans much follow this Loan Process:

    1. Make contact with VA Construction Loan Advisors to determine the best home loan for individual needs.  
    2. Complete an application
    3. Receive a Pre-Approval Letter
    4. Select a builder that is then approved by the lender
    5. Determine where to build
    6. Create the Construction Contract
    7. Submit to your Loan Advisor
    8. Processing/Underwriting
    9. Appraisal
    10. Project Review
    11. Final Loan Approval

    Other advantages of a VA Construction Loan include no down payment for qualifying veterans who have at least a 620 credit score, no required private mortgage insurance (PMI), 100% financing, low fixed rates locked for the life of the loan, and no mortgage payments while construction is ongoing. 

    As the VA does not lend directly, veterans need to find their own lender. HomeLander Mortgage is a one-stop-shop for all mortgage needs – including the VA Construction Loan. With so many advantages to this type of loan, HomeLander Mortgage can help and guide veterans every step of the way. Schedule a call to begin the process at www.homelandermortgage.com

  • What is a VA Construction Loan? Who Can Apply?

    What is a VA Construction Loan? Who Can Apply?

    Veterans who retire from military service often look to settle into the home of their dreams. In some instances, that is accomplished with a VA Home Loan to help finance a home they have shopped for, found and want to purchase. But many others have the dream to actually build the home of their dreams from the ground up. 

    The VA One-Time Close (OTC) Construction Loan allows veterans and their families to plan, design and construct their future dream home and finance it with an all-in-one VA Loan product. As the loan is offered all in one bundle, there’s no need to buy land separately, take out a traditional construction loan, and then refinance to a VA Loan. 

    Since the permanent loan is closed before construction even starts, there is no need for re-qualifying for financing when it comes time to transition from the construction phase to the permanent loan.  Due to this, there’s no need for re-appraising, there is only one underwriting process,  one set of closing costs and – where the loan gets its nickname – a single closing.

    The VA OTC Construction Loan program also offers interim construction financing, lot or land purchase or payoff, and the permanent loan all in one.

    The advantages of a VA OTC Construction Loan include no down payment for qualifying veterans who have at least a 620 credit score. Additionally, there is no required private mortgage insurance (PMI). 

    Other benefits include:

    • 100% financing is available
    • Low fixed rates and that rate is locked for the life of the loan
    • The loan is locked into place before construction begins 
    • No mortgage payments while construction is ongoing
    • Construction Interest is built into the loan.

    This allows veterans to build their future exactly where they want to live and be the home’s very first owner. Veterans are able to customize their home with fixtures and features that represent who they are – where they have been and where they are going in the future.

    Who Qualifies

    A veteran needs to prove their entitlement to VA benefits by obtaining their Certificate of Eligibility (COE.) The VA Construction Loan is only available to active duty service members or veterans. Current and ex military service members are eligible for a COE if they have served at least 90 days of active service or completed 6 years of honorable service. 

    Other borrower requirements include at least a 620-640 credit score and a debt–to–income ratio (DTI) below 41%. Potential borrowers must meet income requirements based on the size of their family and must not have experienced bankruptcy in the last two years. 

    The VA does not lend directly. Borrowers have to find their own private lender. Once they have found one, the next step is to choose an approved builder or general contractor that is properly licensed and approved by the VAl. At this point borrowers can submit their home construction plans to the lender.

    Note that the VA Construction Loan is subject to a funding fee which is added to the total loan. This fee is paid to the Department of Veterans Affairs. Funding fees are collected in order to offset the bank or lender’s losses if a borrower were to default on their mortgage. The funding fee for the Construction Loan is the same as for traditional VA Loans and is set at 2.3% for first time borrowers and 3.6% for subsequent borrowers. There are exceptions for veterans who have a 10% or greater disability or have been awarded the purple heart.

    VA Construction Loan lenders can be hard to find and the process can be confusing and overwhelming for military families. HomeLander Mortgage is a one-stop shop for all mortgage needs – including the VA Construction Loan. 

    VA Construction Loans make it possible for military families to build their own home from the ground up. With so many advantages to this type of loan, the approval process can be confusing. HomeLander Mortgage will be there every step of the way. Schedule a call to begin the process at www.homelandermortgage.com

  • Who Can Apply For A VA Construction Loan?

    Who Can Apply For A VA Construction Loan?

    Who Can Apply For A VA Construction Loan?

    A VA One Time Close (OTC) Construction Loan (commonly referred to as VA Construction Loan) allows a potential borrower to buy land and pay home construction costs all with one single loan. This single loan replaces potentially three separate loans that may be required for you to build a home – Land loan, Construction loan, and the permanent financing you’d need after the home is complete (ex VA 30 yr Fixed mortgage). With a VA OTC Construction Loan, buyers can buy the land (or pay off an existing land loan), finance the construction costs in phases, and automatically convert to the permanent home loan mortgage at the end of the process. This cuts out any need for re-appraising or a second underwriting and closing process.

    The VA Construction loan offers: 

    • Low VA fixed rates – locked prior to closing 
    • No mortgage payments while construction is ongoing
    • 100% financing available

    So who can qualify for this all-inclusive product? Minimum service requirements apply for Army, Navy, Air Force, Marine Corps, Coast Guard, Reserves or National Guard members.

    If a borrower is currently serving, eligibility is established after 90 days of continuous active duty.

    Veterans are eligible if they served for time periods between 90 days to 6 years, depending on their service time period and classification.  See below for some examples or check with your lender to confirm your eligibility with VA.  

    • 90 total days during World War II, Korean or Vietnam Wars
    • 90 active duty days during the Gulf War
    • 6 creditable years in the National Guard or Reserves.
    • 181 days – 24 continuous months in other circumstances and time periods

    For Gulf War veterans (those who have served August 2, 1990 to present day), two years suffices. 90 days may be enough in certain circumstances.

    If a veteran was discharged as a result of a service-related disability, there are no particular minimum service requirements.

    There are some eligible civilians. Military spouses who have not remarried are eligible if their spouse was a servicemember or veteran who:

    • Died while in service
    • Died from a service-connected disability
    • Is missing in action or a prisoner of war

    Even if their late spouse didn’t die due to any service-related reason, widows or widowers may also be eligible if they receive Dependency and Indemnity Compensation (DIC) benefits.

    All borrowers who apply need to contact their lender to obtain a certificate of eligibility (COE) which formally establishes their eligibility. The COE will identify either the era when a borrower earned their entitlement or another cause that makes them qualify for a VA loan. To apply for the COE, veterans will typically need their DD214 discharge papers. Active-duty service members will need a Statement of Service signed by their personnel officer.

    The VA OTC Construction loan has all the same below requirements the VA has for their loan program.  

    • Flexible Debt-to-income ratio criteria
    • VA funding fee which ranges from 2.3% to 3.6% depending on the individual level of entitlement (can be rolled into loan)

    The VA OTC Construction loan offered by HomeLander Mortgage does have a 620 minimum credit score to qualify though.

    Only a VA-approved participating home loan lender can offer a VA OTC Construction loan. As with all VA mortgages, the rules are not the only guidelines which must be followed. State law, other lender standards, local building codes, and other requirements may also apply. 

    HomeLander Mortgage will be there every step of the way. Schedule a call to begin the process at www.homelandermortgage.com