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VA Loans

The VA Loan is arguably the single most powerful and valuable homeownership benefit available to Veterans, active-duty service members, and eligible surviving spouses. Backed by the Department of Veterans Affairs (VA), this program is designed to make home buying accessible, affordable, and flexible for those who have served our nation.

At The Herd Lending, we specialize in maximizing this hard-earned benefit. We believe that a strong service history should speak volumes, which is why The Herd Lending does not impose a minimum credit score requirement for VA loans, aligning with the VA’s philosophy to assess the full financial profile of every borrower.

The VA Loan Advantage: Zero Down & No PMI

The VA Loan program offers financial benefits that set it apart from Conventional and FHA financing:

  • 100% Financing (Zero Down Payment): For most eligible borrowers, the VA loan requires no down payment. This is the most significant financial benefit, allowing service members to preserve savings.
  • No Private Mortgage Insurance (PMI): Unlike Conventional loans where PMI is required with less than 20% down, VA loans never require monthly mortgage insurance. This exemption significantly lowers the borrower’s monthly housing expense.
  • Competitive Rates: VA loans often feature some of the most competitive interest rates on the market.

Assumable Mortgages: VA loans are generally assumable, allowing a future buyer (who may or may not be a Veteran) to take over the existing mortgage and its current rate, which can be a major selling point in future market conditions.

Qualification: Eligibility, Not Just Credit Score

The fundamental key to a VA loan is eligibility, which is confirmed by the Certificate of Eligibility (COE).

1. The Certificate of Eligibility (COE)

The COE confirms to the lender that you meet the VA’s service requirements based on your duty status and length of service during wartime or peacetime.

  • Active Duty Servicemembers need 90 continuous days of active service during wartime or 181 days during peacetime.
  • National Guard and Reserve Members generally need at least six years of service.
  • Surviving Spouses may also be eligible if the service member died in the line of duty or due to a service-related disability.

2. Credit Score: Focusing on the Full Profile

The VA does not set a minimum credit score requirement for the VA loan program. Instead, the VA allows the lender to assess the borrower’s total financial picture.

  • The Herd Lending Policy: We follow the VA’s guidance by not imposing a minimum credit score. Our focus is on the borrower’s overall credit history, income stability, and ability to repay the debt, which often makes homeownership possible for those overlooked by lenders with rigid credit score minimums (which are often set around 620).

The VA Funding Fee: Cost and Exemptions

The VA Funding Fee is a one-time fee paid to the Department of Veterans Affairs. It helps offset the program’s cost to taxpayers, ensuring the program remains viable for future generations.

  • Included in Loan: The funding fee is typically financed into the loan amount, meaning you don’t have to pay it as cash at closing.
  • Variable Rate: The fee is a percentage of the loan amount, ranging from 0.5% to 3.3%. It varies based on:
    • The borrower’s service history (Veteran/Active Duty vs. Reserves/National Guard).
    • The loan’s purpose (Purchase vs. Cash-Out Refinance).
    • Whether it is the borrower’s first or subsequent use of the benefit.
    • The amount of the down payment, if any.

Funding Fee Exemption

A major exemption to the fee exists for:

  • Veterans who receive compensation for service-connected disabilities.
  • Veterans rated as eligible to receive compensation based on a pre-discharge exam or review.
  • Eligible surviving spouses.

If you are exempt, your funding fee is 0.00%.

Occupancy and Investment Rules 🏡

The VA loan benefit is strictly for securing a place to live, not for passive income generation.

  • Primary Residence Requirement: The property purchased with a VA loan must be the borrower’s primary residence. The borrower must certify their intent to occupy the home, typically within 60 days of closing.
    • Exceptions: This requirement can be fulfilled by a spouse if the service member is deployed. Retirees may also negotiate an occupancy delay up to 12 months.
  • Investment Property Restrictions: VA loans cannot be used solely for investment or rental properties.
  • “House Hacking” Exception: The one major exception is for multi-unit properties (up to 4 units). You may use a VA loan to purchase a duplex, triplex, or fourplex, provided you occupy one of the units as your primary residence. The rental income from the other units can often be used to help you qualify for the loan.

Renting After Occupancy: After occupying the home for a reasonable period (typically 12 months) or due to a new Permanent Change of Station (PCS) order, you can generally rent out the property without violating the original VA loan terms.

Your Expert VA Loan Partner

The VA loan is a dynamic benefit that requires an experienced lender to navigate its specific rules, especially concerning credit history, funding fee exemptions, and occupancy exceptions.

At The Herd Lending, our commitment to looking beyond restrictive credit score benchmarks ensures that every eligible Veteran has the opportunity to leverage this powerful tool for homeownership. Ready to start your journey?

Contact The Herd Lending to confirm your eligibility and begin your VA loan pre-approval process today.

Contact Us Today!

Ready to experience the benefits of a VA loan? Contact The Herd Lending today and let our team assist you in securing your VA loan with ease. Call us at (904) 406-7753 or fill out our online contact form to get started. Trust our team for your VA loan needs – your satisfaction is our priority.
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