If you are veteran of military or reserves or National Guard, your dream to have a primary home is one step away. The United States Department of Veterans Affairs (VA) guarantees a VA loan, which is a mortgage loan entitled to American veterans, spouses in case not divorced and reservists. The Department of Veteran Affairs also provides many other facilities such as healthcare services, help with loans and insurances and a Jumbo VA loan is one among them. As such, the VA doesn’t provide you with the loan amount; it facilitates the same with help of lender companies. Here in this article, we have tried to enlist six must-know things before you apply for a Jumbo VA loan.
1. Eligibility criteria
Not everyone can apply for a Jumbo VA loan. The Department of Veteran Affair has clearly laid ground rules to establish the eligibility criteria. The members of the military, a retired veteran, spouses of the personnel who served America and have not remarried after the death of husband and employees of the reserves or National Guard are considered to be eligible. The veteran must have served in the military for at least a period of six months or more, while the employees with service in National Guard or reserves must have done at least 6 years of service to be eligible. During wartime, the period of eligibility for the veteran military is considered to be around 3 months. So first step you have to take is to find whether you are eligible or not. You can also get an online eligibility certificate before you start the application process with all your relevant documents ready.
2. Loan and down payment amount
Generally, the counties have set a limit of $453,100 as a VA loan amount and anything beyond that is classified as a VA jumbo loan. In case of a VA jumbo loan, the borrower needs to pay a lump sum amount of around 25 % on the amount greater than $453,100. However, in some county areas where the prices of housing are too high, the down payment amounts are kept lower.
3. How can you use a Jumbo Loan?
A Jumbo VA Loan cannot be used like a personal loan or a traditional bank loans against any line of credit. The purpose of a Jumbo VA Loan is clearly set to fulfill the need for a primary home for a veteran. This amount hence cannot be used for buying or building a vacation home.
4. Funding Fees
A funding fee has to be paid by the borrower for the loan amount greater than $453,100 or as set by county till $1,000,000. The fee thus becomes less when you offer a down payment amount. Generally, veterans pay around 25 % of the amount as the down payment amount.
5. Interest rates
While the VA or the loan lending companies don’t take into consideration any past credit history or bankruptcy yet having a good credit score helps in getting lower interest rates. Normally a credit score of above 610 or 620 is considered to be okay but even a poor credit score doesn’t cause the rejection of Jumbo VA loan. If the veteran is in a job or has a recommendation from someone who has a good credit score, the lending companies are more than happy to carry forward the entire process.
6. Other advantages
Generally, a VA counselor tries to assist in case the veteran finds it hard to pay back the entire amount and a situation of foreclosure homes. There are hotline numbers to call for getting a VA jumbo loan and application can be filled online which makes it easy for veterans to start the loan process.
In the end, a Jumbo VA loan should be utilized by the eligible applicants due to the advantages it offers. Make sure to read the offer and documents carefully before applying for the loan. For example, be aware of the closing costs, interest rates and other terms and conditions.