Guide to VA Mortgages in
Greater Milwaukee

VA Loans are mostly known for cost effective, no downpayment or low downpayment financing. VA mortgages are cost effective because they involve no mortgage insurance (sometimes known as MI or PMI). Secondly, VA loans involve flexible underwriting that accepts some people that cannot qualify for other types of loans. 

In this article, we'll consider both when VA Loans are strong -- and when VA Loans are often uncompetitive or irrelevant. We'll also look at some VA Loan issues specific to Greater Milwaukee.

It may surprise you to know VA Loans are not just available to veterans. More on this below.

What does the VA home loan do for you? Below are nine benefits of VA home loans.

Nine Benefits of VA Mortgages

By thinking about the following advantages with respect to your personal situation, you'll be able to find ways a VA loan may benefit you -- or whether it's even a relevant option to you.

1. No down payment

VA mortgages are one of the few types of loans that offer true no money down financing. This means you can finance up to 100 percent of the purchase price. Buyers typically bring some money to closing for other items such as closing costs and prepaid items. However, there are ways to avoid bringing cash to closing which we can discuss in more detail when you get in touch.

2. Low interest rates

 

According to one report, VA loans are typically priced at about .25% lower than Conventional. However, some of this variance is due to the fact Conventional is much more credit score sensitive than VA. 

 

3. Low costs

VA Loans are known as low cost loans, but this can be somewhat of a game of shuffle in the mortgage industry. While lenders are prohibited from charging certain fees, they're allowed to add other fees (up to one-point discount fee, for example) into their standard VA loan pricing. Or they can build more of a margin into the rate. However, the low cost structure of VA loans does make it very easy to understand and analyze the cost. 

Another important caveat is that the VA charges a VA Funding Fee, which is often more than the closing costs of the loan. The VA Funding Fee is waived for certain veterans receiving VA disability. More on this topic below.

4. No Mortgage Insurance

One of the major benefits of a VA mortgage is that it does not have mortgage insurance. That's a huge benefit to people making no downpayment or a small downpayment!

 

However, the only people typically paying mortgage insurance are making less than 20% downpayment. So if you're making 15% (in some circumstances) or 20% down payment, you wouldn't have to worry about this anyway. See more under "When a VA Loan May Not Help".

Secondly, while VA loans don't have mortgage insurance, they have a fee other loans don't have -- the VA Funding fee. In a way, this is a word game. It's called "funding fee" rather than "mortgage insurance". But the funding fee is often much less than a person would pay over the life of a loan in mortgage insurance when making a small downpayment or no downpayment.

5. Funding fee waived for some disabled Vets

The VA waives the funding fee for roughly a third of VA Loan borrowers. If you're eligible for the fee to be waived, it will normally be indicated on your Certificate of Eligibility (COE). This is normally connected to disability. VA loan borrowers who receive at least 10% disability are eligible for the funding fee waiver. If your COE does not indicate your most current disability status, please let us know. 

6. Flexible qualification

VA Loans are often known for flexible underwriting. The VA accepts borrowers with many blemishes on their credit report who've reestablished a positive payment track record. The VA does not set a minimum credit score, although nearly all lenders apply some minimum standard. 

7. Expanded Loan Limits for Jumbo-Sized mortgages

The VA has a flexible option for purchasing above its normal loan limits. What's the maximum VA loan limit? The normal loan limits in most places (including all of Wisconsin) for 2018 are:

 

  • $453,100 for Single family

  • $580,150 for two-unit

  • $701,250 for three-unit

  • $871,450 for four-unit

If you want to purchase above the loan limit, it's possible! The VA simply requires you to pay 25% of the difference as a downpayment.

 

For example, if you want to purchase a Single Family for $553,100, that's $100,000 over the maximum loan limit.

 

  • You would pay a minimum downpayment of $100,000 * 25% (=) $25,000.

  • The mortgage amount would be $553,100 (-) $25,000 (=) $528,100

8. Streamlined refinance process.

 

VA loans have an extremely streamlined refinance process called Interest Rate Reduction Loans (IRRL). This could help you in the future if rates decrease. The process to do an IRRL is loved by VA loan borrowers for its ease and efficiency.

 

9. Ongoing VA Support

The VA can offer assistance to veteran borrowers in default due to temporary financial difficulty.

We'd be happy to help you explore whether the potential benefits apply to you. If you plan to search for a home within the next three months, please start out by completing the information at Get Started Online.

When a VA Loan May Not Help

1. When you're putting at least 15% down and have good credit

The main advantages of VA relate to the ability to put no money down. However, there is a premium you pay in exchange for this privilege -- the VA funding fee.

If you have a sizable downpayment available, the main advantage doesn't necessarily help you. You could avoid paying the considerable VA funding fee by using a Conventional loan.

The normal amount to avoid PMI on Conventional is 20%. However, if you have 15% down, there are potential ways to avoid PMI as well. In other cases, it's very minimal and temporary.

2. When another special program applies (such as USDA or WHEDA)

VA is a special program, but there are also other special programs. For example, USDA home loans allow moderate-to-low income borrowers purchase homes in rural areas. The benefits of USDA are also very good, and it's worth comparing the two programs (VA and USDA) to determine which works better. We also have a special benefit WHEDA program for veterans in Wisconsin.

3. When you're buying an investment property

VA does not finance investment properties -- unless you're simply trying to refinance an existing investment property that you originally purchased as a primary residence.

However, VA does finance multifamily properties (2-4 units). If you move into one unit, you could rent out the other units. You must live there for at least one year. After that, you could move and rent out the unit you occupied.

4. When you're buying with a coborrower who's not your spouse

A common question we receive is, "can there be a coborrower on a VA Loan?"

The answer is a qualified yes. However, if the coborrower is NOT your spouse and NOT independently eligible for a VA loan, there are special procedures. This involves a calculation related to your VA entitlement. This can result in requirement for downpayment. It also impacts underwriting.

5. When you already have a VA loan.

The VA only allows one loan at a time. In order to get a new VA loan, you (1) have to sell the existing property and (2) pay off the existing loan first, and (3) restore your Certificate of Eligibility. As a one-time exception, you can reuse your VA benefit if you've paid off the prior VA loan while you still own the property.

In order to get subsequent VA loan, you need to restore your Certificate of Eligibility. This involves providing documentation to the VA and waiting for a VA review process. Therefore, you would need to set aside enough time after the first property is sold or paid off in order to start the process to purchase a subsequent property with a VA loan. We can work with you to try to minimize this time, but proper planning is essential.

VA Loan Issues Specific to Greater Milwaukee

The real estate market in Greater Milwaukee is extremely competitive. We have a shortage of homes available on the market -- the lowest number ever recorded in our area -- while home sales continue to rise. 

Unfortunately, one limiting factor on VA Loans is the VA requirement to use the VA Appraisal Ordering System. All appraisals are ordered through the VA system, and there is no way to expedite it. There is a waiting period in Greater Milwaukee due to a shortage of VA-approved appraisers. Most VA appraisals take at least three weeks. This can delay your closing process and put you at a disadvantage.

The best way to mitigate this disadvantage is to get a head start on your loan process before you find a home. This will not change the appraisal timeline, but it can shorten your overall closing process, and it can provide more confidence to the seller as both of you are waiting for your appraisal to be completed. We offer a special head start program that takes you way beyond pre-approval, establishes you as a strong buyer, and helps you regain a competitive edge although you may be experience a slower appraisal with a VA Loan. To find out about this, see our VIP FasTrak program.

Let's Work Together!

As you can see, we're very open about the pros and cons of each program. We're committed to helping you find the options that fit you best.

Unlike banks and credit unions, we only do mortgages. That means our reputation and livelihood depend solely on the experience of each customer in the mortgage process. You're valuable to us, and you will be our priority.

On top of that, we'll give you a distinct advantage for getting your offer accepted. When the seller's Realtor sees we're providing your financing, it can make a big difference because of our strong reputation in the real estate community. Our VIP FasTrak program can give you a serious head start that sets you apart from other buyers, makes the seller more confident in your offer, and allows you to close more quickly.

If you're searching for a home within the next three months, you first step is to complete the information at Get Started Online.

Who is Eligible for a VA Home Loan?

We often receive questions like this:

  • How long do you have to be in the military for a VA Loan?

  • Can I get a VA loan as a reservist?

  • Can a family member of a Veteran get a VA Loan?

The answers depend on several factors that we describe below.

Although VA Loans are primarily known as a benefit for veterans, they're also available for active duty military members, selected Reserve or National Guard members, members in certain organizations, service members of select government agencies, and some surviving spouses.

The major eligibility categories for a VA home loan include:

  • Active-duty service personnel: 

    • If you are now on active duty, eligibility can be established after 90 days of continuous active duty.  Upon discharge or release from active duty, eligibility must be reestablished.
       

  • Service during peacetime:

    • If you have served 181 active-duty days during peacetime, unless discharged or separated from a previous qualifying period of active- duty service
       

  • Veterans who served during World War II, Korea, or Vietnam:

    • If you served for 90 days and were honorably discharged

    • OR were discharged for a service-connected disability
       

  • Veteran of foreign allies in World War II

    • Certain U.S. citizens who served in the armed forces of a government allied with the United States in World War II

  • Gulf War (August 2, 1990)

    • 24 months continuous active-duty - with other than dishonorable discharge

    • At least 90 days or completed the full term that he or she was ordered to active duty with other than dishonorable discharge

    • At least 90 days active duty - and discharged for hardship, early out, convenience of the Government, reduction in force, condition interfered with duty or compensable service-connected disability

    • Less than 90 days active duty - if discharged for a service-connected disability
       

  • Separated from service (Enlisted - After Sept. 7, 1980 / Officers after Oct. 16, 1981)

    • 24 months continuous active duty - with other than dishonorable discharge

    • At least 181 days or completed the full term that he or she was ordered to active duty with other than dishonorable discharge

    • At least 181 days active duty - and discharged for hardship, early out, convenience of the Government, reduction in force, condition interfered with duty or compensable service-connected disability

    • Less than 181 days active duty - if discharged for a service-connected disability
       

  • Selected Reserve or National Guard:

    • If you are not otherwise eligible and you have completed a total of six credible years* in the Selected Reserve or National Guard (member of an active unit, attended required weekend drills and two-week active duty for training) and one of the following:

      • Were discharged with an honorable discharge

      • Were placed on the retired list

      • Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service

      • Continue to serve in the Selected Reserve

    • Individuals who completed less than six years may be eligible if discharged for a service-connected disability.

  • Spouses
    The spouse of a Veteran can also apply for home loan eligibility under one of the following conditions:

    • Unremarried spouse of a Veteran who died while in service or from a service connected disability, or

    • Spouse of a Servicemember missing in action or a prisoner of war

    • Surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003

    • Surviving Spouses of certain totally disabled veterans whose disability may not have been the cause of death 
       

  • Other Eligible Beneficiaries
    You may also apply for eligibility if you fall into one of the following categories:
     

    • Certain U.S. citizens who served in the armed forces of a foreign government allied with the United States in World War II
       

    • Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with World War II service, and others
       

  • Co-borrowers. 

    • A spouse of a VA-eligible borrower

    • Independently-eligible coborrowers can qualify together

    • Any other person would prompt special procedures which change how the VA loan works. A special calculation, related to the sales price and number of borrowers, determines the amount of down payment required. Get in touch with us to explore.

Whether or not a VA Loan applies to you, we'd be happy to help you explore your most relevant options. If you're planning to search for a home within the next three months, you can start out by completing the information at Get Started Online.

Frequently Asked Questions

What is the current interest rate for VA home loans?

There is not a single rate for VA home loans. There are multiple options on a scale of rates and costs. The particulars also vary from lender to lender.

In order to get an accurate picture of the rate and costs and help comparing your various options, complete the information on our Get Started Online page. 

How do you qualify for a VA loan?

VA Loans are designed to be flexible in their qualification standards. The primary factors in qualification are:

 

  • Credit track record: Does the borrower demonstrate the ability and willingness to repay debts)?

  • Debt-to-income ratio: Is the borrower's income sufficient to afford the home and other existing debts?

  • Assets: Typically, minimal assets are required VA loans offer a no downpayment option. However, lenders are required to document sufficient assets for any borrower contribution in the transaction (such as depositing earnest money with the seller, insurance, tax escrow, ect.) The borrower may also need at least a minimal amount of savings after closing.

  • VA Loan Eligibility: The borrower needs a Certificate of Eligibility from the VA.

 

The VA does not loan money directly, so you need to apply with a VA-approved lender (e.g., our company). 

 

If you would like to buy a home within the next three months, your first step is to complete the information at our Get Started Online page. 

 

If you plan to buy beyond three months in the future, we'd be happy to set up an initial phone discussion with no cost and no obligation. This will provide some valuable guidance and help you plan and prepare for your purchase. Use the contact form at the bottom of this page.
 

What’s the VA Mortgage Cash-out Refinance Option?
 

VA Loans provide a refinance option to free up cash with a cash-out refinance. This provides cash-out based on the equity you have built up in the home. In order to qualify, your home must have sufficient equity to qualify for VA refinancing.

Who pays closing costs on a VA loan?

By default, the borrower pays loan fees and some other closing costs associated with the loan. However, we always encourage you to get in touch with us in advance -- before you find a home. One of the things we'll discuss is how the seller can pay closing costs on your behalf.

Additionally, in some cases we can provide No Closing Cost Options

It's important to get in touch with us early on and understand your options before you make an offer to purchase. Once you make the offer to purchase, you limit some of your options. So get in touch with us early on!

 

Again, if you'd like to purchase a home within the next three months, complete the information on our Get Started Online page. The clock is already ticking!

 

If you plan to buy later than three months, use the contact form at the bottom of the page.

What is the maximum VA loan amount?

As mentioned above, the VA has an awesome option for purchasing above its normal loan limits. What's the maximum VA loan limit? The normal loan limits in most places (including all of Wisconsin) for 2018 are:

 

  • $453,100 for Single family

  • $580,150 for two-unit

  • $701,250 for three-unit

  • $871,450 for four-unit

If you want to purchase above the loan limit, it's possible! The VA simply requires you to pay 25% of the difference as a downpayment. You can see an illustration in #7 of the "benefits" above. Not all lenders participate in this expanded loan limit option, but we do participate and would be happy to help you purchase above the normal loan limits!

How much do I have to put down on a VA loan?

If you are purchasing a home within the normal loan limits, no downpayment is required. VA Loans provide 100% financing for home purchases.

If you are purchasing a home above the normal loan limits, see the answer directly above.

However, you may wish to put more than the minimum down payment. Your down payment level will also impact the funding fee charged by the VA (see below).

What credit score is required for a VA loan?

While the VA does not set a minimum score, it requires lenders to evaluate a borrower's credit track record.

 

Most lenders set minimum scores. Our minimum credit score for VA Loans is 580 which is significantly lower than most lenders. However, scores under 620 prompt additional requirements to ensure responsible lending.

What is the funding fee for a VA loan?

The fee varies based on several factors including type of service, down payment level, transaction type, and whether it's your first VA loan. These are displayed on the tables below:

Regular Military

Reserves

National Guard

How can the VA funding fee be waived?

Note that the funding fee may be waived for veterans on at least 10% disability!

The VA waives the funding fee for roughly a third of VA Loan borrowers. If you're eligible for the fee to be waived, it will normally be indicated on your Certificate of Eligibility (COE). This is normally connected to disability. VA loan borrowers who receive at least 10% disability are eligible for the funding fee waiver. If your COE does not indicate your most current disability status, please let us know. 

What are the steps to getting a VA home loan?

  1. Secure pre-qualification by completing the information at our Get Started Online page. We will walk you through the steps to prepare for your home purchase.
     

  2. Find a home!
     

  3. Closing process. Typically the closing process takes about 45 days. We will gather additional documentation from you during this process and complete steps such as the appraisal. You can significantly reduce this period by getting a head start with our VIP FasTrak program.

Can you get more than one VA loan in your lifetime?

Yes! The VA home loan benefit can be reused if you have paid off your prior VA loan and sold the property. In addition you may  be able to reuse or restore your benefit eligibility if your prior VA loan has been paid in full and you still own the property. This is a one-time exception only.
 

In either case, there is a process to restore your eligibility that takes time -- often about 2-3 weeks.
 

We can work with you to find a way to coordinate your home purchase after your home sale. By getting in touch with us early, we can help you plan and prepare.

What's My Next Step?

If you'd like to buy a home or refinance within the next three months, your first step is to complete the information at our Get Started Online page. This will help us get to know you, help you explore options, and walk you through your next steps.

If you're more than three months away (or if you live outside Wisconsin), use the contact form below for an informal, free consultation that will help you plan and prepare.

Greg Schliesmann
Branch Manager, NMLS# 234288
Cherry Creek Mortgage Co., Inc

Greg Schliesmann
Branch Manager, NMLS# 234288
Cherry Creek Mortgage Co., Inc

1033 N Mayfair Rd, Suite 100
Wauwatosa, WI 53226

Tel: 414-617-1756

1033 N Mayfair Rd, Suite 100
Wauwatosa, WI 53226

Tel: 414-617-1756

Free Access to Greg's Valuable Video Series

Five Strategies to Stand Out from Homebuyer Competition and Get Your Offer Accepted!

Free Access to Greg's Valuable Video Series

Five Strategies to Stand Out from Homebuyer Competition and Get Your Offer Accepted!


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Cherry Creek Mortgage Co., Inc. NMLS #3001. All Rights Reserved. Some loan products may not be available in all states. Terms, rates, and fees subject to change. Please speak with one of our loan originators for more detail.