The VA home loan benefit is a useful tool for military members or veterans hoping to buy a house at their next duty station or after leaving the military. But with a variety of specific restrictions and plenty of myths about what it is and how it works, VA home loans can be difficult to navigate for many users, especially in a hot housing market.
VA home loan expert, Marine Corps veteran and California-based real-estate agent JP Pena joined us on a recent episode of PCS with Military.com to share his best advice for homebuyers. Here are a few of his tips.
Be financially prepared. Just because you're using a VA home loan doesn't mean you are automatically qualified for a very large loan, said Pena. Instead, you need to make sure your financial house is in order by watching your overall debt and money background.
Listen now: Using Your VA Loan in a Crazy Housing Market (with JP Pena)
"And that is something that doesn't sit well with a lot of people, because now they're like, 'Wait a minute, I make this much money. I should be able to buy that,'" he said. "Yeah, on paper, it looks good, but once we send it to underwriting and the VA looks at it, they're not going to like that debt-to-income ratio. Therefore, that number that you truly want, it's not going to be able to happen. In fact, we're like about $200,000 less than what you want."
Related: Your VA Loan is one of your most valuable military benefits, and a VA Loan calculator is a great place to get started. Click here to calculate your rate in minutes.
Start house-hunting as soon as possible. It's easy to think if you're not planning to move for several months to a year, you can wait on looking for housing. But holding off is a mistake, Pena said -- especially in a hot housing market. VA home loans can have longer approval processes than other types of mortgages, and finding a home in a hot housing market with an appraisal that follows VA rules can be hard.
"I have a gentleman from Dubai right now, he's PCSing next month. He's just now starting this whole process and investigation, asking the right questions and all this stuff. It's late, because for example, if you're going to be moving to California, which is one of the most expensive states, especially L.A., you're not going to find a home in 30 days," he said. "Starting at least a year in advance, I'd rather say be over-prepared and be ready to have a successful transition, versus trying to wait until the last minute and do it."
Don't take advice from the wrong person. Finding a good loan officer who is familiar with the VA loan process and rules is really important for creating a smooth and low-stress, home-buying experience, Pena said.
"There's this veteran I was working with for the last eight months. We helped them get his credit good to go. ... His friend told him to use this agent," he said. "This guy has no experience working with VA [loans]. So now he is stuck in an escrow, where he's going to have to cancel, because the VA won't approve this condo and he's most likely going to lose his $5,000."
Find a VA Loan
If you're ready to move forward, or just want more information, the first step is to get no-obligation rate quotes.
