VA home Loans
Colorado
As a veteran, active duty service member of the armed forces, or eligible surviving spouse, the VA loan program can help you save money when you buy your Colorado dream home. Issued by private lenders and backed by the Department of Veterans Affairs, VA loans offer many benefits that are available only to service members or eligible surviving spouses.
Between the simple application process, reduced closing costs, and lower loan payments, a VA mortgage can make the American dream a reality for you and your family. Read on to learn how VA mortgage programs and a qualified loan officer can work for you.
VA Home Loan Benefit for Colorado Borrowers
VA loans are highly desirable for active duty service members and surviving spouses because of the unique benefits they offer. From property tax exemption for qualified disabled veterans to a flexible loan term, members of the armed forces have help if they choose to purchase a home in Colorado.
No Down Payment Required
One of the most appealing benefits of a VA home loan over conventional loans is the waived down payment. Conventional loans require a 3%- 20% down payment, which is a huge sum of cash for some buyers. Many people prefer to put down 20% if possible to ensure they don’t have to pay for private mortgage insurance. However, for VA loans, as long as the home's sale price is at or below the appraised value, most lenders will waive the down payment.
No Private Mortgage Insurance Premiums
Conventional and all FHA loans require private mortgage insurance for borrowers who put down less than 20% of the home price. This protects the mortgage provider if the borrower defaults on their loan.
The VA home loan program waives mortgage insurance since the Department of Veterans Affairs insures the loan. Instead, the VA makes an agreement with a private lender called a VA home loan guaranty. The guaranty protects the lender in case a borrower defaults on the loan.
Competitive Interest Rates
Thanks to the VA loan guarantee, VA loan specialists from banks, mortgage lenders like Pride Lending, and credit unions can offer lower interest rates than most loans. The guaranty insures 25% back on the loan in case of default, so offering a VA loan is a lower risk for most lending companies. A competitive interest rate may reduce the monthly payment for a VA loan in Colorado.
Flexible Credit Requirements
VA home loans were designed to make homeownership accessible to members of the armed forces regardless of economic factors or lack of credit history. The VA continues this mission by not requiring a minimum credit score for applicants of VA mortgages. Lending companies have score requirements that are typically lower than for traditional home loans.
No Prepayment Penalties
Unlike some conventional loans, a VA loan in Colorado does not incur a penalty fee if you pay it off early.
Assistance for Struggling Borrowers
The Department of Veterans Affairs works hard to ensure you receive help if you face financial difficulties and cannot pay your mortgage. Whether you reach out to your mortgage provider or contact the VA directly, assistance is available.
Eligibility Requirements for VA Loans in Colorado
There are important VA loan requirements to know before pursuing a Colorado mortgage and, in some cases, an exemption from property taxes. A veteran should meet basic service requirements of either 90 days of wartime service, 181 consecutive days of peacetime service, six or more years of service in the National Guard or Reserves, or be the surviving spouse who has not remarried, surviving spouse of a service member who died in active duty or from a service related injury.
To receive a Colorado VA loan, a veteran with military service or a surviving spouse should contact a loan officer licensed in Colorado. Buyers eligible to apply for a VA home loan must first receive a Certificate of Eligibility (COE). This document demonstrates to private mortgage companies that the borrower has VA loan eligibility and entitlement.
The VA Loan Process
Get your COE: The Certificate of Eligibility verifies a borrower's ability to get a VA Loan. Pride Lending can help you obtain your COE, making the process seamless.
Check Finances: Determining a budget is crucial to ensuring you know how much house you can afford. Examine how much money you have after necessities, such as utilities. An expert at Pride Lending can help you learn more about your debt-to-income ratio and finances.
Choose a Lender: Work with a lender like Pride Lending, a VA loan specialist in the area. Your lender must understand how VA loans work, can guide you through the requirements, and maximize your benefits.
Shop for a House: Next, it’s time to find a house you’d like to purchase. Work with local real estate agents or check out online listings to find houses within your price range. Make sure your home meets your personal requirements, such as how many bedrooms it should have.
Purchase Agreement: A purchase agreement is a legally binding contract between the buyer and seller. These contracts outline the terms of the sale to protect the buyer and seller. For example, a buyer may put a clause in the contract in case the appraisal value is lower than expected. Many contracts include an Earnest Deposit Clause, which details how much the buyer will put down as a deposit and terms for refunding the deposit, such as if the buyer doesn’t make certain repairs.
Inspection and VA Appraisal: An inspection is often recommended because it gives an in-depth look at the home’s condition. Buyers can negotiate a more favorable price if they have to spend a significant amount of money on repairs. A VA appraisal is required to obtain a VA loan. An independent VA appraiser will look at the property’s condition and ensure it meets the minimum property requirements to ensure veterans or their families don’t wind up with an unsafe property.
Complete Underwriting: Underwriting is the process lenders use to evaluate a borrower’s financial situation. You’ll need to submit proof of income, expenses, and assets. A lender will determine your debt to income ratio, look at your credit score, and evaluate your finances to determine if you are eligible for a loan.
Closing: Finally, you attend the closing and sign all necessary papers. The funds are sent to escrow, the loan closes, and you receive the keys to your new home!
VA Loan Limits and Funding Fees
Servicemembers, veterans, and surviving spouses with full entitlement do not have a loan limit for a mortgage over $144,000. This is noted on the Certificate of Eligibility, which shows that the borrower has never used their loan benefit, paid off a previous VA loan and sold the home, or used their loan benefit and had a foreclosure that they repaid in full.
In Colorado, veterans who do not have full entitlement must follow Colorado VA loan limits. Limits vary by county and range from $766,550 in Colorado Springs to $1,149,825 in areas with higher home prices, such as Aspen.
Regardless of the VA loan limit, all home loans have a one-time VA funding fee that varies depending on the amount of money put down on the property and the borrower’s military service. The cost is a percentage of the total loan and fluctuates from 1.25% to 3.3%.