My husband and I are planning on purchasing a home and were confused about how the the VA loan works...We also wanted to know if our credit scores are both in the mid 600s with an income of about 50,000 how much house can we probably afford. It's kind of hard because my husband is the only one bringing in an income. I am a fulltime student and left the service a year ago. Should my husband apply for the loan of the house by himself or not? Should we rent for a while until I have been employed for 6 mos or so and then apply for a house or should we go on and pursue buying a house instead.

VA loans are getting less popular nowadays becasue 100% financing is now common in the conventional forms. I have used 2 VA loans, well, not me but my husband. My name was on them both, and I didn't have an income. The thing with VA though, is that they are govt backed, meaning the govt insures them, and if the house were to be foreclosed on, the govt owns it. you also pay a 2% funding fee for the first VA loan that you use, and 3% for the second one on. VA, you also have to be employed for two years for your income to count. I believe conventional is 1 year. Check with a lender of your choice to see what options are available to you. But I wouldn't recommend VA unless their rates are lower than the conventional loans. My information may not be 100% correct.

Fannie Mae Freddy Mac conventional requires 2 years in the same line of work. Some situations may be considered as an exception.

I think you are dead on. Some details vary from lender to lender. Some tend to allow more risk because they negotiated it with Fannie or Freddy. Same on some government loans.

Generally, with an income of $50,000/yr and no other monthly bills other than utilities and insurance, you should at least qualify for about $175,000.00. If you have a monthly car payment of say $500/mo, and minimum credit card payments of say $200/mo, subtract $70,000, or $105,000. There is flexibility in the VA guidelines so these figures are not etched in stone.

You do not have to be employed for two years if you are not on probation at your new job and you can document that your new job is based in part on your prior experience. For instance, if you previously worked in food service in the Military or elsewhere, and you get a job as a cook, your lender can obtain a statement from your employer that you are not on probation and the prospect for continued employment is good. If you are and independent contractor, a Realtor or Carpenter for instance, then you will normally need two years tax returns to substantiate your income. There are exceptions to this guideline as well.

You should find a direct endorsement VA lender and prequalify for a loan before making any decision about waiting or renting. Good lenders for VA loans are usually located in the vicinity of military bases. For more information, here's a link to a lender I trust and use for VA loans: www.natlbank.com/mortgage/programs.php

As far as the 2% funding fee is concerned, it can be rolled into the loan, FHA has a 2.25% mortgage insurance premium, and conventional loans tend to charge outrageous junk fees and points that far exceed the 2% funding fee.

Good Luck!

Dennis, I appreciate you taking the time to explain this to me and my husband as well as using great examples. I will look into the website your referred. Thanks!!!

oh, I also wanted to know would it make sense for me to apply for the house with my husband if I don't have a job? Especially since my credit score is lower than his?

Chiloquin, Talk to a direct endorsement VA lender about the best method for applying based on your current financial and credit situation. They will know immediately how to best structure the financial side of your anticipated purchase.

Happy House Hunting.

Hello,

I your husband does the loan on his own, just make sure the title company knows to put you both on the title.

So you can have both our names on the title even if I am not on teh loan? Would this help my credit?

it won't help yur credit, but it would show your name on the title in the deedbook at the courthouse and once the loan is paid off the house will be in your name as well.