VA home Loans
Florida
VA home loans are mortgages provided by private lenders but guaranteed by the Department of Veterans Affairs. This guarantee reduces lender risk in case the borrower defaults, allowing lenders to offer more favorable conditions to eligible veterans, active-duty service members, and surviving spouses.
VA loans allow Florida veterans to purchase their dream home more easily than with a conventional loan. The Department of Veterans Affairs must treat all marriages equally, which extends to VA mortgage programs. This means a surviving spouse is eligible for a VA loan in Florida regardless of the spouse’s sex, and they can use this to purchase, construct, or improve a home or even to refinance a mortgage.
VA Home Loan Benefit
Unique VA loan benefits include no PMI, more favorable interest rates, no down payment requirements, and flexible credit requirements. Thanks to these benefits, the VA home loan is a powerful financial tool for LGBTQ+ veterans, who are four times more likely to report financial hardship compared to non-LGBTQ+ veterans.
No Down Payment Required
For most homebuyers, the down payment is the greatest obstacle to homeownership, especially in a competitive market like Florida. For example, the median down payment in the Sunshine State is 15.20% or $33,411.
However, a VA loan does not require a minimum down payment, so any eligible veteran can purchase a home by paying 0% upfront.
No Private Mortgage Insurance Premiums
Unlike conventional loans, VA loans do not require private mortgage insurance, which can reduce the monthly mortgage payment substantially — in Florida, the average PMI is currently $651 per month.
Competitive Interest Rates
The VA’s guarantee allows lenders to offer lower interest rates, meaning most VA loans are more affordable than conventional mortgages. With the median home price in Florida reaching $420,000 in mid-2024, lower VA loan rates make housing more affordable to LGBTQ+ veterans and spouses.
Flexible Credit Requirements
VA home loans have more lenient credit requirements than conventional loans. Most lenders expect a credit score of 620, but there are varying credit score requirements, sometimes with scores as low as 500. While the VA doesn’t set any requirements, the typical acceptable DTI for VA loans is 41%.
No Prepayment Penalties
You can pay off your Florida VA loan as early as you’d like, and the lender does not have the right to charge a prepayment penalty. However, paying off the home loan early is not always the best option as it may have other financial implications, such as losing tax deductions on mortgage interest.
Assistance for Struggling Borrowers
Another benefit of a VA home loan is assistance for borrowers who are struggling or facing foreclosure. Veterans or active-duty service members have several assistance options:
Repayment plans – Your servicer helps you create a repayment plan to avoid foreclosure.
Special forbearance – This refers to a period of usually three to four months during which your monthly payment is suspended or reduced.
Interest Rate Reduction Refinance Loans - Although this loan is available for all VA borrowers, it’s especially useful to people undergoing financial hardship. It creates a new loan with a lower interest rate to reduce the monthly mortgage payment.
The Veterans Affairs Servicing Purchase (VASP) program – The VASP program is a last-resort option after all other assistance options have been attempted. If you’re struggling to repay a VA loan, the VA may buy the modified loan through your loan servicer.
Eligibility Requirements for Florida VA Loans
Whether you're a veteran, an active-duty service member, or a surviving spouse, you need to meet certain eligibility criteria in order to benefit from the VA home loan program. The requirements include duty status, the length of service, and other factors.
Veterans and active-duty service members – Generally eligible after 90 continuous days of military service in war or 181 days of active service during peacetime. They must have been discharged under conditions other than dishonorable.
National Guard and Reserve members – Typically eligible after six years of service or 90 days of active-duty service (and a minimum of 30 consecutive days).
Surviving spouses – May be eligible if they have not remarried and their spouse died from service-related injuries or disability.
Due to the repealed “Don’t Ask, Don’t Tell” policy, many LGBTQ+ veterans have received a discharge that prevents them from fully exercising their rights. Although the DOD announced reviewing military records of members discharged because of their sexual orientation, the process is not complete.
Until further updates, service members discharged because of DADT can request a discharge upgrade, especially if it will help them meet VA home loan requirements.
Certificate of Eligibility
The Certificate of Eligibility (COE) is a critical document that proves a veteran, active-duty service member, or surviving spouse meets the necessary service requirements for a VA home loan. The COE is needed to verify eligibility, submit a VA loan application, and determine the level of VA entitlement.
The VA Loan Process in Florida
VA loans work just like all other loans, except the fact that you need to get a Certificate of Eligibility. Here’s a detailed guide to getting a VA loan in Florida:
Obtain your Certificate of Eligibility (COE) – Obtain a COE through the VA’s eBenefits portal, your VA-approved lender, or by completing a VA Form 26-1880 and mailing it to the appropriate regional loan center. It’s the first step, but it doesn’t guarantee you’ll be approved for a loan.
Start the pre-approval process – This process starts with a quick conversation so we can understand your budget, income, assets, and credit score. It includes filling out a loan application and submitting documentation (proof of income, employment, assets, and debts).
Receive pre-approval – The lender will review your finances, check your credit report, and, if you fit the criteria, send you a pre-approval letter stating the loan amount you’re likely to receive.
Find a home and sign a purchase agreement – Once you find a home with a suitable purchase price, make an offer. If the seller accepts, sign a purchase agreement.
VA appraisal and underwriting – The client and realtor often schedule an inspection of the property. Once they decide to move forward witht he purchase, the loan officer will order an appraisal. The company and future owner will review the information and determine if the client is moving forward with the purchase. After that, the underwriting process begins, which involves credit checks, asset verification, and all other financial information. Then, they will review all the information to decide.
Closing on your loan – You’ll receive a Closing Disclosure document, which outlines the final terms and costs of your home loan. After that, you’ll sign the agreement, pay the closing costs, and receive the keys to your new home.
VA Loan Limits and Funding Fees
For most veterans, the VA loan limit has been removed, allowing eligible borrowers to obtain VA loans with no maximum loan amount, provided they meet the lender's credit and income requirements.
However, since VA loans are backed by the Federal Government, borrowers must pay a one-time VA funding fee to reduce the loan's cost to taxpayers. This fee varies based on the down payment amount and the borrower's service history.
First-time use – The fee is 2.15% of the loan amount for those with a down payment of up to 5%. With a down payment of 5% to 9.9%, the fee is reduced to 1.5%. For a down payment of 10% or more, the fee is 1.25% in 2024.
Subsequent uses – The fee is 3.3% with no down payment or a down payment up to 5%, 1.5% with a 5% to 9.99% down payment, and 1.25% with a 10% or more down payment.
Service history exemptions – Homebuyers who are eligible for compensation for a service-connected disability, pre-discharge claim compensation, or Dependency and Indemnity Compensation. Purple Heart recipients are also exempted from paying the fee.