Veterans, active-duty military members, and surviving spouses can benefit from VA loans. VA loans in Florida are available for qualified veterans to purchase primary residences, second homes, or investment properties.
It offers competitive mortgage rates, and the loan process is transparent and simple. Claiming rental income to qualify for a VA loan makes good sense for many veterans, but specific criteria must be met to qualify. If they are eligible, veterans can finance the entire cost of their new homes with no out-of-pocket expenses.
So if you are considering purchasing a house in Florida, it’s time to learn more about VA loans. Florida mortgage company is dedicated to helping veterans, and active-duty members take advantage of this great opportunity.
What is a VA Loan?
The Department of Veterans Affairs (DVA) backs the loans, not the lenders. So you can be assured that your loan will be approved. VA loans also require much smaller down payments than conventional loans and allow for very competitive interest rates because the VA guarantees the loan even if the veteran fails to repay it.
But there are certain eligibility criteria that must be met before applying for a VA home loan in Florida, such as active duty service in either peacetime or wartime, or having served at least one day during wartime and being discharged under honorable conditions. Surviving spouses of veterans who died in service and Purple Heart recipients also qualify for VA loans.
How Does a VA Loan Work?
The VA loan application process is simple and straightforward. You start by finding a real estate agent or mortgage lender in Florida that understands how to work with VA loans. Your chosen lender will contact a local approved VA lender who will order your credit report and determine your eligibility.
After you meet the basic VA loan requirements, such as having served in active duty or wartime or being an eligible spouse of a veteran, they’ll provide you with loan pre-approval.
Your chosen lender will arrange the appraisal and negotiate the terms of your VA loan. It can take a minimum 30 days to complete the process once the offer to purchase has been accepted from start to finish.
Can you qualify for a VA loan by using rental income?
It’s possible to use rental income to qualify for a VA loan, but it depends on the type of rental property.
If you have an investment property that will be used as collateral for your VA loan, certain rules govern how much rental income you must show to prove its viability. A rental property is considered an investment property if it’s not the home where you currently reside.
To be eligible for a VA loan, you must make the rental income from an investment property cover the loan’s monthly debt service and taxes. If you own a second home, those expenses will also be included.
When determining how much rental income is needed, lenders will factor in the interest rate on your loan and compare that to prevailing interest rates for similar loans.
So if you want to purchase a second home using rental income, your rental payments must be equal to or greater than the predicted monthly debt service on the loan.
Things to keep in mind when using rental income to qualify for a VA loan
1. No out-of-pocket costs
There are no closing costs when using rental income to qualify for a VA loan, saving you money on closing costs and fees. It leads to a lower monthly payment, which means you’ll get to keep more of your hard-earned money.
2. Pre-approval
A VA loan pre-approval is quick and free – and allows you to shop for a home without the pressure of an expiration date. This is particularly useful for those looking to negotiate with a seller.
3. Debt-to-income ratio
VA loan eligibility gets determined by the debt-to-income ratio. And that means your rental payments need to include in the calculation. You will also need to show two years’ worth of rental income and tax returns.
4. Credit score
The minimum credit score needed to be eligible for a VA loan is 620, which may be somewhat problematic for those who have recently experienced credit problems. It takes patience, time, and hard work to rebuild credit, but it’s worth it in the long run once you do!
5. Down payment
Using rental income to qualify to form a VA loan with no down payment is possible. Of course, this will rely on the type of property you plan to buy and your lender. There are lenders who allow for no down payment depending on the type of VA loan you are applying for.
6. Loans that allow for rental income
A VA appraisal is required if you want to use your rental income to qualify for a VA loan. Your lender must review because this is the only way you will know if using rental income is a wise financial move.
Conclusion
VA loans are often the best choice for veterans looking to become homeowners. You can also use rental income to secure a VA loan. However, make sure you talk to your mortgage lender in Florida before purchasing a home in which you plan to use rental income. Then, you can figure out which loan options best fit your situation and be prepared for the purchase.
