If you are planning on using a VA loan to purchase a property, they very first thing you should do before you begin to spend your valuable time driving around town looking for houses is to get fully approved for a VA loan. There are a lot of details involved when you apply VA loan. You want to make sure you have gone through the process and submitted all your documentation to the lender so you are 100% sure you qualify for a VA loan before you start searching and making offers.
Here is a review of the process for getting a full pre-approval for a VA loan:
- Have an up front conversation with your VA loan officer over the phone where they will take a loan application and review your information
- Have a credit check run
- Have your VA loan officer run your VA certificate of eligibility check
- Send your last 30 days paycheck stubs, last 2 years W-2’s and bank statements where you have your savings to your VA loan officer
The above information is generally enough for you VA loan officer to do a thorough pre-approval for you to know that you can get a VA loan. This will give you peace of mind when you are searching for a home that you have gone through this process and you exactly what purchase price you can qualify for, and you will know once you get an offer accepted your loan will close.
Again, getting a full pre-approval is a critical step because there are really a ton of details that need to be factored in. The loan officer needs to:
- Fully review your exact month income and your exact monthly debt + new housing payment and see if it fits the VA guidelines to qualify
- Items such as collections on your credit or judgments will have to be analyzed
- If you have child support, those payments will have to be factored in to your qualifying ratios
- VA has a special residual income calculation that has to fit the guidelines
- Even if your spouse is not going on the VA loan, in community property states such as California, your spouse’s debt payments (car loans, student loans, credit card payments, other mortgages) will have to be factored in
So those are just some of the items the VA loan officer must look at. Many items can pop up and possibly deny the VA loan, so make sure your get pre-approved for your VA loan! A full pre-approval can be done in less than an hour by an experienced VA loan officer!
Again VA is a great loan right now because…..
- 100% financing
- VA loan interest rates are at historic lows
- VA loan limits in many California counties (and other states) can go up to $900,000+ for 100% financing
- You can get a second VA loan if you have already had one in the past, as long as you have sold or refinanced the property that had the VA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
Up Front Pre-Approval Important Before You Get a VA Loan to Buy is a post from: VA,FHA and Conventional Loans
For first time buyers or buyers in expensive areas like California that want to keep their housing payments down, buying a duplex with FHA financing is a really great way to go. Many times a home buyer can buy a duplex, and after collecting the rent from the other unit, their total housing payment is less than if they would have bought a condo and certainly less than if they purchased a single-family home. Additionally, if you want to eventually move out of the duplex to a single-family home, you can always keep the duplex as an excellent long term investment. Or if you stay, over time the rents will rise on the other you unit you rent where your housing payment will stay fixed, so over time the rent from the other unit may pay your total housing payment and you live for free! How is that for a retirement program!
FHA makes it very easy to qualify for a FHA loan on a duplex. It’s is really a fantastic niche because you can get the same great FHA financing you can get on a condo or single-family home on a duplex:
- FHA loan down payment only 3.5% on a duplex, and all of that can be a gift from a relative
- The same historic low FHA loan interest rates can be had on a duplex with 30 year fixed rate loans
- FHA allows you to count 90% of the rental income from the other unit to help you qualify FHA loan on a duplex. This extra income can help you qualify for a higher purchase price than a condo or single-family
- Maximum FHA loan in many parts of California for duplexes are higher than the maximum on condo’s or single-families…up to as high a $934,200 in many counties in California (and other states). This allows you to buy a duplex in the best parts of Los Angeles, San Diego, San Jose, San Francisco, etc…
- FHA loan credit scores do not have to be perfect to buy a duplex
- Conventional loan vs FHA with buying duplex…you probably need 10% down payment with conventional and the qualifying credit and debt ratios are much more strict
So if you are in the market to buy a property, think about buying a duplex.
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Starting in late 2007 the mortgage industry as a whole started a general tightening of guidelines that has continued in dramatic fashion over the last 2+ years. Yet through all of this, VA lending has stayed pretty much the same as it was before the all the problems in the mortgage market began.
For non-VA loans there is no more 100% financing, credit score minimums have gone way up, conventional loans require 10% down for the most part, and income ratio standards have gone tightened considerably. But VA loans have really not changed that much. You can still get a VA loan with 100% financing, your credit score can be as low as 600, and the qualifying debt-to-income ratios for VA remain much more flexible than conventional loans and sometimes even FHA loans.
Some other benefits of VA loans:
- VA borrowers can get a second VA loan, third VA loan, etc.. You just can’t have more than one VA loan at once
- VA loan limits in California counties can be as high as $962,500 for 100% financing jumbo VA loan
- VA loan interest rates remain at historic lows
- Sellers can pay all of a VA borrowers closing costs
So it is worthwhile to consider using your VA benefits to purchase. With California and other state home prices being down, many active military VA borrowers can buy a house for LESS than their BAH housing allowance! And on top of this you get a $8,000 check from the IRS if you haven’t owned in the last 3 years and $6,500 if you are a move up buyer if you buy by April 31st 2010. And on top of that you have the standard mortgage interest and property tax write-off of owning a house vs. renting.
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
Despite All The Changes In The Mortgage Market, VA Home Loans Stay The Same is a post from: VA,FHA and Conventional Loans
FHA announced major changes in its condo guidelines this summer, there were some negative changes such as the elimination of the FHA spot condo approval, which allowed for a single unit approval even though the entire condo project was not approved. Although FHA has since extended spot condo approvals until Feb 2010. Approval of condo complexes not currently on the FHA approved condo list will now have to be getting the entire project approved by either the lender or FHA. The details on this process are still somewhat murky and not defined. But some good news from FHA is that “site” condos no longer have to be approved by FHA in order to qualify for a FHA loan.
Site Condos are basically like single family detached properties yet fall under a condo style of ownership. Condo Project approval is not required for Site Condominiums; however, the Condominium Rider must be included in the FHA case binder submitted for insurance endorsement.
Site condos on their own lots in developments that have condo ownership and may have some common care covenants. These condo’s can now be financed just like single family homes. They do not have any of the hassles associated with getting a FHA loan on a regular condo.
Regular condo’s that are not site condos and not on the FHA approved list have become very difficult to finance. Conventional loans with less than 20% down can often require 70% of the units in condo projects to be occupied by owners among other onerous requirements. Many of the condo’s being purchase in California are with 20% down or all cash, because they are not FHA approved and do not have the owner occupancy to qualify under the Mortgage Insurance guidelines for a less than 20% down conventional loan.
So in summary, make sure you check with me first if you are shopping for a condo in California. I can check to see if it is on the FHA list if you are going with a FHA loan, I can check the occupancy if you are going with a conventional loan and I can also tell you if it’s a “site” condo.
And here are some highlights to remember about FHA loans:
- To get a FHA loan credit score does not have to be perfect
- FHA loan interest rates are at historic lows
- You can use gift funds for FHA loan down payment
- Maximum FHA loan is $729,750, so you can get a FHA loan in expensive parts of California like Los Angeles, San Jose, San Francisco and San Diego
- Debt-to-income ratios on FHA loans are allowed up to 55% where conventional loans require 41% with less than 20% down
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
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If you plan to get a VA loan and you are considering buying a condo, make sure you check with me before you begin to drive around and look at condos. To get a VA loan on a condo, the condo has to fit certain guidelines. Many of the condos in the state of California and elsewhere are not eligible for VA loans.
Basically, the condo has to be on the VA or FHA condo list of approved condos for you to be able to get a VA loan on that condo. Just check with me and I can look up for you to see if the condo is on the approved list. If it is not on the FHA or VA approved condo list, one option for you even if you are VA approved is to go with a FHA loan instead and get what is called a “FHA spot condo approval”. Spot approvals are only available at this time until February 10th 2010. With a spot approval, the condo will need to have 50%+ of the units occupied by owners and also conform to a number of other rules. But with a FHA loan you will have to put 3.5% down vs. zero down with a VA loan.
Conventional loans with less than 20% down can be even stricter than FHA and VA loans for condo qualification. Because with less than 20% down on a conventional condo loan, you will need mortgage insurance. The mortgage insurance companies have very strict guidelines for condos. They can sometimes require 70% of the condo units to be occupied by owners.
So to save a ton of time, if you are looking for a California VA home loan (or other states as well) on a condo, make sure you contact me first and I can get you fully approved for a VA loan and also assist you with checking to see if that condo project is on the VA or FHA approved list.
Some nice advantages of VA homeloans:
- To qualify for a VA Loan credit does not have to be perfect, even if you think you have bad credit you may still qualify for a VA loan
- 100% financing with VA lending – VA offers the only zero down loans today
- VA loan interest rates are at historic lows – the U.S. Government is artificially pushing down rates to stimulate the economy so take advantage of it while you can!
- $8,000 home buyer tax credit available until April 2010!
- VA homeloans allow the seller to credit you for all of your closing costs – so this + 100% financing means you can buy with almost no money out of pocket
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
Tips to Get a VA Loan on a Condo or Townhome is a post from: VA,FHA and Conventional Loans
Since the lending guidelines radically changed in 2008 it’s been more difficult for self-employed borrowers and independent contractors to get mortgage financing. Prior to 2008 many borrowers with this type of income would get “no doc” home loans where they would not have to fully document their loans. But in 2008 all the “no doc” loans went away and now self-employed borrowers, independent contractors and everyone not paid as a w-2 employee have to qualify based on their most recent two years of tax returns.
So to get FHA loan the first step will be to supply your last two years tax returns for qualification. So if you are going to be buying in 2010, you will need your 2008 and 2009 federal tax returns all pages, all schedules. If you file K1’s or corporate returns you will also need to send those returns in. For FHA loan approval for self-employed borrowers, the FHA underwriter will take the NET business income off your 2008 and 2009 federal tax returns and average the two years. So if your NET in 2008 was $80,000 and your NET in 2009 was $90,000, the FHA loan underwriter will use $85,000 as your qualifying income.
It is very important to realize that it is the NET income that will be used for FHA loan approval, not your gross income. Many self-employed people write off many expenses, so their gross may be high, but their NET may not be low. This can be a challenge for many. However, there are deductions that can be added back into your NET income to increase that figure. We are a specialist at knowing the FHA guidelines and we are able to have many deductions added back into NET income helping self-employed borrowers. Here is a list of deductions that can be added back to NET income:
- Business use of home
- Depreciation
- Loss carryover’s from previous years
- Mileage depreciation rate (40% of the total per mile auto expense rate)
- and more
Also, if you operate as a corporation and pay yourself W-2, we will still need to look at your last two year tax returns. If the corporation is showing a loss, that loss amount may have to be deducted from the W-2 income you pay yourself.
The best thing to do if you are self-employed and want to qualify for a FHA loan (or conventional loan) is to call me and send me your federal tax returns so I can go over them in detail and let you know how much income we will be able to count.
Here are some general highlights of FHA loans:
- Only 3.5% required for FHA loan down payment (vs. 10% down in most cases on conventional loans in California)
- Maximum FHA loan up to $729,750 in many counties of California and other expensive states
- FHA loan interest rates at historic lows (the U.S. Government is currently buying Mortgage backed securities at an unprecedented rate artificially holding down interest rates…this will not last that much longer)
- Seller can credit up to 6% of the purchase price for FHA loan closing costs
- FHA streamline refinance to lower rate options available once you have an FHA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
The VA has released the VA loan limits for 2010. These limits are the loan amounts the VA will allow up to 100% financing to. The limits are by county. Below is a list of the counties in California and what their VA loan limits are for 2010. The VA loan limits for the rest of the counties in California is $417,000.
- Alameda: $962,500
- Contra Costa: $962,500
- El Dorado:$418,750
- Los Angeles: $593,750
- Marin: $962,500
- Mono: $512,500
- Napa: $443,750
- Nevada: $418,750
- Orange: $593,750
- Placer: $418,750
- Sacramento: $418,750
- San Benito: $633,750
- San Diego:$437,500
- San Francisco:$962,500
- San Luis Obispo: $487,500
- San Mateo: $962,500
- Santa Clara: $633,750
- Santa Cruz: $568,750
- Ventura: $486,250
- Yolo: $418,750
If you get a VA loan you can still go above these VA loan limits. But if you are buying in one of the above counties with a VA loan and you want to go above the amounts listed above, you will have to put down 25% of the difference between the purchase price and the county VA loan limit. If you wanted to buy a $700,000 house in Los Angeles County, you would take ($700,000-$593,750)=$196,250 and multiply that by 25% and get $26,562. So you could get a VA loan on a $700,000 house in Los Angeles County with $26,562 down.
I like to end as always with highlights of VA loans:
- To qualify for a VA Loan credit does not have to be perfect, even if you think you have bad credit you may still qualify for a VA loan
- 100% financing with VA lending – VA offers the only zero down loans today
- VA loan interest rates are at historic lows – the U.S. Government is artificially pushing down rates to stimulate the economy so take advantage of it while you can!
- $8,000 home buyer tax credit available until April 2010!
- VA homeloans allow the seller to credit you for all of your closing costs – so this + 100% financing means you can buy with almost no money out of pocket
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899
The Department of Housing and Urban Development which puts out the guidelines for borrowers to qualify for a FHA loan has just released some new rules for borrowers selling their current house as a short sale and then getting a new FHA loan to purchase a new house.
Basically the main points of the new FHA short sale guidelines are if a borrower has been current on their mortgage and other installment debts (such as auto loans, student loans, etc…) for the last 12 months prior to the short sale, they may be eligible for a new FHA loan immediately on a new primary residence they want to buy after their current house is sold on a short sale.
However is a borrower has been in default on their mortgage or other installment debts in the 12 months leading up to the short sale, they will have to wait three years from the date the short sale closes before they will be eligible for a new FHA loan.
So if you are thinking of doing a short sale on your current primary residence and you want to buy a house again without waiting three years, the key point is you can’t have any late payments on your mortgage or other loans for 12 months leading up to the short sale. Of course the challenging aspect here is that many lien holders will not consider doing a short sale for borrowers unless they are in default. But if you want to buy another home in the next three years and get a mortgage on it, you may want to speak to your lender and see if they will consider a short sale even if you are not late on the mortgage.
Of course these rules are the guidelines that came out of the Dept of Housing and Urban Development. The lenders that actually fund the FHA loans can create their own “overlays” to these guidelines. So it is ultimately up to how the lenders will interpret these new rules.
Here are some general highlights of FHA loans:
- Only 3.5% required for FHA loan down payment (vs. 10% down in most cases on conventional loans in California)
- Maximum FHA loan up to $729,750 in many counties of California and other expensive states
- FHA loan interest rates at historic lows (the U.S. Government is currently buying Mortgage backed securities at an unprecedented rate artificially holding down interest rates…this will not last that much longer)
- Seller can credit up to 6% of the purchase price for FHA loan closing costs
- FHA streamline refinance to lower rate options available once you have an FHA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
The Department of Housing and Urban Development which puts out the guidelines for borrowers to qualify for a FHA loan has just released some new rules for borrowers selling their current house as a short sale and then getting a new FHA loan to purchase a new house.
Basically the main points of the new FHA short sale guidelines are if a borrower has been current on their mortgage and other installment debts (such as auto loans, student loans, etc…) for the last 12 months prior to the short sale, they may be eligible for a new FHA loan immediately on a new primary residence they want to buy after their current house is sold on a short sale.
However is a borrower has been in default on their mortgage or other installment debts in the 12 months leading up to the short sale, they will have to wait three years from the date the short sale closes before they will be eligible for a new FHA loan.
So if you are thinking of doing a short sale on your current primary residence and you want to buy a house again without waiting three years, the key point is you can’t have any late payments on your mortgage or other loans for 12 months leading up to the short sale. Of course the challenging aspect here is that many lien holders will not consider doing a short sale for borrowers unless they are in default. But if you want to buy another home in the next three years and get a mortgage on it, you may want to speak to your lender and see if they will consider a short sale even if you are not late on the mortgage.
Of course these rules are the guidelines that came out of the Dept of Housing and Urban Development. The lenders that actually fund the FHA loans can create their own “overlays” to these guidelines. So it is ultimately up to how the lenders will interpret these new rules.
Here are some general highlights of FHA loans:
- Only 3.5% required for FHA loan down payment (vs. 10% down in most cases on conventional loans in California)
- Maximum FHA loan up to $729,750 in many counties of California and other expensive states
- FHA loan interest rates at historic lows (the U.S. Government is currently buying Mortgage backed securities at an unprecedented rate artificially holding down interest rates…this will not last that much longer)
- Seller can credit up to 6% of the purchase price for FHA loan closing costs
- FHA streamline refinance to lower rate options available once you have an FHA loan
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions at all about getting approved for a FHA Loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and FHA specialist)
858-922-7899
Here are some miscellaneous items that I see often come up as issues when VA borrowers eligible for VA loan benefits apply for a VA Loan:
1. Remember in community property states like California, even if your spouse is not going on the loan with you, their credit report will still need to be submitted. Their debt obligations will have to be counted in your qualifying debt-to-income ratios. But remember, their credit quality cannot be a reason for the denial of the loan. So your spouse can have a very low credit score but it doesn’t matter if they aren’t going on the loan, all that matter is if they have a car loan, credit cards, student loans only in their name, those payments have to be counted as your debt as well.
2. Watch out for collections on your credit. If you have a creditor trying to collect on an old bill that is over $5,000, you may have to pay this before you can be approved for a VA loan.
3. If you are currently active military, to get a VA loan you will have to have 12 or months remaining with your service in the military. If you have less than 12 mos remaining, you have to have documentation of a civilian job lined up.
4. All VA homeloans require a clear termite report. When you a buy a property you must have a termite inspection done and all section 1 and 2 items must be cleared prior to the VA lending.
5. I just wanted to throw in here that many times I see large auto loans as a major reason borrowers can’t qualify for the amount of VA loan they would like. Many times VA home buyers will have two or more car loans and this really affects the purchase price of the house they can get. My advice is to try and buy a smaller car with cash or go with one car until after you have the house. A house is a much better investment than a car.
6. Make sure you never miss a payment on any of your bills. VA loan credit requirements require you to have a 620 or greater middle credit score to get the better VA interest rates. However you can still get a VA loan with a 600 score.
So those are six areas to look out for when preparing to apply for a VA loan. Here are some highlights of VA financing:
- 100% financing…VA borrowers are very lucky because there is really no 100% financing left out there unless you are VA eligible
- VA loan interest rates are at historic lows
- VA loan is flexible and will work with you on credit issues
- Conventional loans require 41% debt-to-income ratios if you have less than 20% down, VA loans will allow upwards of 55% debt-to-income ratios
- VA loans allow the seller to pay 100% of your closing costs
- VA loan streamline refinances allow you to lower your interest rate easily once you have a VA loan
- VA loans are assumable by other VA borrowers, making it easier to sell down the road
- VA loan limits in many areas of California are over $650,000 with 100% financing!
Give me a call (858-922-7899) or email (homeloan8@gmail.com) if you have any questions or want to apply for a VA loan.
Warmest Regards,
Rob Chomentowski
Sr. Loan Officer (and VA specialist)
858-922-7899