VA Loan Requirements
Before we get into the standard purchase, we need to remind ourselves of some of the basic eligibility requirements to participate in the VA home loan program. So first of all, is this person a veteran, if so, we need their COE. Do they have their DD214? Did they provide their statement of service that verifies they’re actually eligible to participate in the program?
Next up are lenders requirements, their debt-to-income ratio requirements, their credit score requirements, and everything that the lender needs to say, yes, I trust this veteran. I want to give them a loan and I trust them to pay it back. Third, is the intent of use for the property. This has to be their primary residence. Either the veteran or the veteran spouse has to have the intent to make this their primary home.
VA Loan Benefits
The second thing we need to remind ourselves of are the benefits of using the VA loan. We want people to be advocates to get veterans out there and use this wonderful program. For example no down payment, no private mortgage insurance, lower closing costs, no prepayment penalties, all of those umbrella benefits.
We need to make sure our veterans understand, our lenders understand and our realtors understand to get veterans using this program. Now that’s out of the way, let’s talk about what type of property to come by with the standard purchase loan. So what can a veteran purchase with the VA standalone? Well, they can buy a single-family unit or they can buy multiple units with a business unit attached.
They can purchase a farm residence, purchase a condo, or build new construction, and you can also use it to buy a home and make improvements to it. So there’s a lot of variety. On what a veteran can use a loan for. Next, we’ll get into what they cannot use a VA home loan for. What can a veteran not purchase while a veteran cannot purchase a property with the intent to use it as an investment?
Remember, you have to have it as your primary residence for yourself or your spouse. You cannot buy or construct a property with the intent to improve it later on. You’ve got to do that within the loan. You cannot buy or construct a combined residential and business unit. You’re not allowed to do that either. And you cannot buy more than one separate residential property, with some exceptions.
Now, those exceptions are going to be in the vendor handbook and there are dozens of them. But generally, you cannot buy a home for those reasons. So veterans may not know this because a lot of us like to see what we can get or what we can get away with. It’s up to you to remind them and let them know, like, Hey, these types of properties are not allowed. We cannot support a loan for those purposes.