While the Veterans’ Administration does not set a minimum credit score standard for VA Home Loans, the mortgage industry does.  In the wake of the subprime meltdown, many of the secondary market mortgage investors (companies that buy bundles of mortgages) have tightened credit criteria. 

Here at Flagship Mortgage, the minimum credit standard for lending on VA home Mortgages is set at a minimum credit score of 580.  Credit Rescoring products are available to permanently increase credit scores.  Ask your Loan Originator for more information.

Other criteria than just credit score are also considered in underwriting.  A minimum of no more than 1 late on any credit, revolving debt and installment debt, including mortgages, is allowable according to most guidelines.

A Bankruptcy does not necessarily preclude VA Home Mortgage financing.  In the case of a Chapter 7 Bankruptcy, a minimum of 1 year from discharge must elapse.  However, cases with less than 2 years from discharge require the presence of an extenuating circumstance, such as loss of job due to medical reasons, for example.  A Chapter 13 bankruptcy is allowable as long as 1 year from filing has elapsed and all payments have been made on a timely basis to the bankruptcy trustee. 

Of lesser importance are medical bills, generally considered to be outside of the borrower’s ability to control, and having far less negative impact on overall credit underwriting. In some cases, when medical bills are large, they may be required to be paid off with the proceeds of the loan.

Currently we have the following Jumbo VA Rates with 0 points as of business close on 12/11/08:

30 Year Fixed            5.75% Note Rate       5.875% APR

15 Year Fixed                        5.75% Note Rate       5.952% APR

Typical minimum FICO scores of 680/700.  Full Doc loans only.  Subject to verification of post closing assets and full underwriting.*

We also offer competitive pricing on FHA, and Conventional Loans in Richmond County, VA.  And we offer USDA loans in qualified Rural Development areas.

* Guidelines subject to change without notice and subject to final investor underwriting **Price adjustments for loans over $750k on fixed rate loans: add a .25% for fixed rates over 750k

Virginia License #MB-4076

If you’re a veteran or military spouse entitled to a VA Home Mortgage Loan, you may be faced with a difficult decision:  which mortgage loan is more advantageous to you, VA or FHA? Each type of government loan has government fees associated with it.  With a VA loan, it’s the VA Funding Fee.  For an FHA loan, it’s the Up Front Mortgage Insurance Premium (UFMIP) and the monthly Private Mortgage Insurance (PMI.)

So, which is better? Let’s take an example.  The results may surprise you!

Here are the salient facts for our example:

• Property Value 150,000
• Borrower’s current mortgage payoff is $112,515
• Borrower wants maximum cash out
• Subsequent Use of VA loan (she already used her VA home loan benefit once before)
• Interest rate on both VA and FHA loan = 5.5%
• 30 year fixed rate term

In an FHA loan, the maximum cash out loan-to-value percentage is 95%.  With a value of $150,000, that gives us a base loan amount of $142,500.  What about that UFMIP?  That gets financed in on top of the base loan amount, giving us a total loan size of: $144,943  - with the UFMIP totaling $2493.  The UFMIP percentage in this example is 1.75% because of the loan being over 15 years and greater than 90% loan-to-value.

We will pay off the current mortgage balance with the new loan, as well as give HUD their UFMIP ($2493) and roll in the closing costs.  How much are closing costs? Good question! On an FHA loan, they happen to be higher? Why, because one of the benefits of a VA loan is that the VA has mandated very low closing costs and have strict guidelines for lenders and broker charged fees. In this example, the FHA closing costs, prepaids (interim interest and hold back amounts for establishing escrow) total $6000.

The math looks like this: total loan amount of $144,943, less UFMIP of $2493, less closing costs and prepaids of $6000, less mortgage payoff of $112,515 EQUALS cash back to borrower of $23,935. 

The monthly principal, interest and PMI payments on this 30 year fixed rate mortgage note are $889, which includes a monthly PMI payment of $65 for the life of the loan.  Over 30 years, the borrower will pay back a total of $320,400.

In a VA loan, the maximum cash out loan-to-value percentage is 100%.  That gives us a base loan amount of $150,000.  Rolling in a 3.3% VA Funding Fee puts the total loan at $154,950 with the VA Funding Fee equaling $4,950.  The VA Funding Fee was calculated based on a regular service veteran’s subsequent use of the benefit.

Again, we’ll payoff the current mortgage, give the VA the Funding Fee and roll in the closing costs.  In the case of the VA loan, as stated earlier, the closing costs are less.  In this case, the closing costs and the prepaids total $4,333. 

The math looks like this:  total loan amount of $154,950, less VA Funding Fee of $4,950, less closing costs and prepaids of $4,333, less mortgage payoff of $112,515 EQUALS cash back to borrower of $33,152.  That’s a difference of $9,217 more cash back to the borrower!

The monthly principal and interest payments on this 30 year fixed rate mortgage note are $880.  Over 30 years the borrower will pay back $316,800.  That is a difference of $3,240 to the borrower’s benefit.  When you combine the savings over the life of the loan repayment of $3,240 with the additional cash back at closing of $9,217 – you get a total cost savings advantage to the VA loan borrower of $12,457. 

Based on overall savings, the VA loan outperforms for this borrower. Oh, and how would a consumer make this determination without having amortization tools at her disposal? By comparing the APR! The APR on the FHA loan is 6.502% and on the VA loan it is 5.66%  When all else fails, compare the APR.

The new maximum loan limits for Wyoming are available now as a result of recently enacted VA benefits.   The previous loan limits on VA loans was $144,000.  However, loan limits in all Wyoming counties, are now $417,000. 

More information on loan limits can be found at: 

http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

The High Cost counties have maximum loan limits up to $427,500.  More information on loan limits can be found in the Bookmarks on the right side bar of this site labeled: VA Loan Limits.

The new maximum loan limits for South Carolina are available now as a result of recently enacted VA benefits.   The previous loan limits on VA loans was $144,000.  However, loan limits in all South Carolina counties, are now $417,000. 

More information on loan limits can be found at: 

http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

The new maximum loan limits for New Mexico are available now as a result of recently enacted VA benefits.   The previous loan limits on VA loans was $144,000.  However, loan limits in all New Mexico counties, are now $417,000. 

More information on loan limits can be found at: 

http://www.homeloans.va.gov/docs/2009_county_loan_limits.pdf

The new maximum loan limits for New Jersey are available now as a result of recently enacted VA benefits.   The previous loan limits on VA loans was $144,000.  However, loan limits in all New Jersey counties, except the ones listed in the chart below, are now $417,000. 

The High Cost counties have maximum loan limits up to $747,500.  More information on loan limits can be found in the Bookmarks on the right side bar of this site labeled: VA Loan Limits.

More information on loan limits can be found in the Bookmarks on the right side bar of this site labeled: VA Loan Limits.

The new maximum loan limits for Maryland are available now as a result of recently enacted VA benefits.   The previous loan limits on VA loans was $144,000.  However, loan limits in all Maryland counties, except the ones listed in the chart below, are now $417,000. 

The High Cost counties have maximum loan limits up to $812,500.  More information on loan limits can be found in the Bookmarks on the right side bar of this site labeled: VA Loan Limits.