Once you’ve verified that you meet the service requirements for a VA loan, you need your income, assets and credit to check out, as well as the property you’re buying. Requirements may also vary for any loans your lender considers a VA jumbo loan.
VA loans can also be used on condos and manufactured homes, but not all VA lenders will finance loans for these property types. If you’re getting your loan with Rocket Mortgage, you can get a VA loan for a condo, but not for a manufactured home.
In order to be in compliance with VA loan occupancy requirements, the property you buy must be your primary residence within 60 days of purchase. You can’t use a VA loan for a vacation or investment property, but you can use it to buy a one-to-four family home if the eligible member uses it as a primary residence.
The VA doesn’t require a specific minimum credit score for VA loans, so the credit requirement varies by lender. The minimum median credit score for a VA loan from Rocket Mortgage is 580. If you want to take 100% of your equity out of your home and converted to cash, this requires a 620 credit score.
Your lender will evaluate your debt-to-income ratio (DTI) when considering your ability to pay back the loan. Your DTI represents how much of your monthly income goes toward paying back debt. The VA does not set limits on your DTI, although your lender might. At Rocket Mortgage, the maximum DTI will often vary based on factors like your credit score and down payment or equity amount.
VA Loan Limit
The VA doesn’t limit how much you can borrow, except in the case of impacted entitlement. But when loan limits do apply to a VA loan, they're usually based on conventional loan limits, which as of 2022 sit at a minimum of $647,200 for contiguous U.S. states. Additionally, lenders often use the conventional loan limits as the lower bounds for VA jumbo loans.
Certain high-cost areas have higher limits. If you need a loan higher than that amount, you may be able to look into a VA jumbo loan, which doesn’t require a down payment and may offer a lower rate than regular jumbo loans.
Down Payment And Assets
VA loans are one of the few loan options that don’t require a down payment. Your lender may have specific requirements for a no-down-payment VA loan.
For example, they may require that you have a higher credit score if you’re putting down less than 10%. The requirement to purchase a home with a VA loan through Rocket Mortgage with no down payment is still a median of 580 for any loan that falls within conventional limits.
It’s important to keep in mind that “no down payment” doesn’t mean “zero cost.” In addition to VA loan closing costs, there are some other fees to be prepared for, even if you’re putting 0% down. Here’s a glance at just a few of them:
Most people who get a VA loan are required to pay a funding fee, which covers the cost to taxpayers. The VA funding fee normally ranges from 1.4% – 3.6% of your loan amount. If you previously had a VA loan and you’re doing a VA Streamline, the funding fee is 0.5%.
The cost of the fee is determined by your type of service, the size of your down payment or amount of equity, whether it’s the first-time you’re getting a VA loan and whether you’re buying or refinancing the property. Surviving spouses, veterans who receive disability and Purple Heart recipients serving in an active-duty capacity are exempted from funding fees.
Don’t worry, though. In most cases, if you don’t have the money upfront, the VA funding fee can be rolled into your mortgage.
Most loans require you to have additional money in the bank that you’re not using for upfront costs. This ensures that you’ll be able to make payments once your loan closes. The amount of leftover funds you’ll need is determined by the cost of your mortgage payment, including principal, interest, taxes and insurance. Although it’s not always required, it’s a good idea to show reserves equal to 2 months’ worth of mortgage payments.