By: Veterans United
Veterans and service members have access to a $0 down loan program created to expand access to homeownership.
However, being eligible for a VA loan and actually getting one aren’t the same things. Satisfying the program’s eligibility requirements is a key step, but prospective buyers still need to meet credit, income and other benchmarks.
VA home buyers who get the most from this hard-earned benefit often share some common characteristics. Here’s a look at four big ones.
1. They Know the (Credit) Score
Most VA lenders will require a minimum credit score. The cutoff can vary, but a 620 FICO score is a pretty good representation. That’s considerably lower than what veterans would need for conventional financing, but it can still be a tough figure to hit.
Get copies of your credit reports for free at AnnualCreditReport.com before starting the home-buying journey. Look for mistakes, bad information or any other issues that could be affecting your score.
2. They Have a Handle on Debt
You don’t need to be debt-free to land a VA loan—not even close. But the relationship between your income and debt will play a key role in how much home you can buy.
Paying down high-interest debt can help strengthen your financial profile and maximize your purchasing power. Lenders will often have caps on how much “derogatory” credit you can have, so work to pay down any accounts in collection.
Judgments and liens will have to be cleared up before a loan can close.
3. They Get Pre-Approved
VA loan pre-approval is critical in the current home-buying market. It also makes a ton of sense for prospective buyers. Getting pre-approved gives you a clear window into what you can afford and how much house you can buy. It also shows sellers and their real estate agents you’re a legit buyer likely to make it to closing day.
You can start looking at homes without loan pre-approval. But that also opens the possibility of falling in love with a home and even getting under contract on one that you can’t actually afford.
4. They Prepare for Upfront Costs
The biggest benefit of VA loans is the ability to purchase with $0 down. But home buying comes with other upfront costs. Savvy VA home buyers have at least some cash on hand for an earnest money deposit and to cover the costs of an appraisal and a home inspection.
These expenses can vary depending on where you’re buying and other factors. The good news is VA home buyers can look to recoup most of these costs at closing.
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This article was written by Chris Birk, Director of Education at Veterans United Home Loans and author of “The Book on VA Loans: An Essential Guide to Maximizing Your Home Loan Benefits.”
