The Closing Costs for a VA Loan

When buying a home with the VA loan, there is no down payment, making it an excellent option for veterans. However, one financial obstacle that veterans will still need to face is closing costs. Closing costs are paid at closing for the lender’s fees, insurance, taxes, title transfers, and other fees needed to complete the purchase.

How Much Are Closing Costs?

While the exact amount can vary in different parts of the country, they usually average between three and five percent on a less expensive home. There are online loan estimate forms that can help you determine an approximation of what your total closing costs will be. These costs are paid for by you out of pocket, but in some cases, the seller will pay up to four percent of the closing costs for the buyer. This is discussed in negotiations with the seller, and they can help pay for any of the fees, up to the four percent mark. There are also programs that can help you pay for closing costs if you need financial assistance.

What Fees Are Included in Closing Costs?

While most of the closing costs you will pay are the same for a VA loan and another type of loan, the VA does have some differences. There are some fees that the VA prohibits, including mortgage broker commissions, prepayment penalties, attorney fees, and settlement charges. The only attorney fees that the VA will allow are for title work, no other fees will be included in closing costs.   While the fees included in your closing costs can vary, depending on your location, these are some that can give you a general idea of what you can expect.


The cost of an appraisal can vary, but it is usually around $500. The VA sets the cost of the appraisal, and it does need to be paid upfront. The appraisal is to determine the full value of the house, to ensure you are not overpaying, and to make sure the home meets the VA’s minimum standards.

Flood Certification

The lender will use this to determine if the home is in a flood zone; this is usually around $20. If it is, you will need to purchase flood insurance too. Flood insurance is an ongoing insurance policy that is required by your lender and is not usually covered by a standard homeowner’s insurance policy. The first year’s premium is due at closing, and depending on how much it is, you may end up having a lot more money added to your closing costs.

Homeowners Association (HOA) Fees

Often HOAs will charge you annual dues, which are not necessarily included in your closing fees, but you may want to factor the amount due into what you will need for closing.

Homeowner’s Insurance

The full year’s premium for homeowner’s insurance is due at closing. The standard policy does not protect against flooding, and it may not cover damage from natural disasters like earthquakes. Usually, these policies only cover things like trees falling on homes, fires, and other things like that.

Loan Origination Fee

This is the lender’s compensation for the loan, which the VA limits to one percent of the total loan amount. The lender might not include fees for underwriting or processing the loan in this fee. The lender can itemize the fees up to one percent or they can charge a flat rate of one percent. If they choose the flat rate option, they are not allowed to charge you additional processing fees. This is unique to the VA loans.

Record Fee

Your local area sets this fee, and it is to make the sale public record. It can be as little as $20 or up into the hundreds of dollars.

Reserves for Tax and Insurance

This is another fee that varies by the taxes and insurance on the home and the area. This escrow is intended to cover the taxes and insurance premiums when they become due. Your lender can help you establish how much you will need for this.

Survey Fee

A company will come out to the property to determine where the physical property lines are. While this is not usually required, it is recommended so you know exactly where the boundary lines are on your property. This usually costs around $400.

Title Fee

This fee is difficult to average, because it is dependent on the loan amount, purchase price of the home, and your location; ranging from a few hundred dollars to over $1,000. The title report and title insurance protect both the owner and the lender from someone claiming ownership to the house and winning in a lawsuit. If that happens, both the owner and the lender are reimbursed for the loss.

VA Funding Fee

This is a one-time fee the VA charges most borrowers for their loan benefit, and it can be rolled into the mortgage if desired. If a veteran is receiving VA disability, they are exempt from paying the VA funding fee. This fee helps fund future loans for other veterans. The fee can be anywhere between 0.5 percent and 3.3 percent, depending on the loan amount.

Getting a VA Loan When Self-Employed

When buying a home, your employment and your income are a key factor in whether or not you will be approved for a mortgage loan. If you are self-employed, you may face some unique challenges to get a loan. The income from being self-employed is often less stable and consistent than what you would receive working for someone, and this inconsistency can lead to your lender needing to probe more deeply into your financial records.

Who is Considered Self-Employed?

You are considered self-employed if you have sole ownership or at least 25 percent ownership in a business or if you are a freelancer or contract worker whose income is mostly covered under  IRS Form 1099-MISC.

Documentation You Need

If you are self-employed, you will need to provide your lender with a year-to-date profit and loss statement, and something to show your current finances, two years of your individual tax returns and business tax returns, and a list of your partners and/or stockholders. The lender may also want to see your business license and a letter from a CPA stating that you are still in business. This is more in-depth than you would have to provide as an individual because your lender needs to ensure that you have the income necessary to make your mortgage payments. They need two years of income records to ensure that your income is not dropping every year and is either remaining steady or increasing. If you do have a significant drop every year, you will need to provide a written explanation for this drop, but if it is too big, your lender is likely to decline your loan application. The process of proving your income is a little easier if you have recently taken over a family business, if the business has a proven track record of success. In this case, you only need to provide one year of income, though the more you give the lender, the better they can determine how much to give you for your mortgage loan.

Net Income

One area the lenders will focus on is the business losses and expenses. Your net income is what you make after your expenses, so everything you write off on your taxes is not taken into account by lenders. The tax write offs are something that businesses like to utilize on their taxes, but having too many expenses can be problematic when seeking a loan. Writing off expenses gives you less taxable income, which is all that lenders are allowed to count when they process your loan application. For example, you made $80,000 last year, but you wrote off $25,000 of it in expenses. This means that your net income for the last year is only $55,000, which is all the lender will count in your income.

Keep Personal and Business Accounts Separate

Proving your income is difficult enough when you are self-employed, so keeping your personal and business finances separate is important. If you work alone, it can be easier, since you know which expenses are personal and which are business, but if you have a partner it can be a little bit trickier.

6 Loans for Aspiring Homeowners to Maintain Their Financial Well-Being

If you have decided to build your home or some other construction project on your own, rather than buying it, you can’t count on mortgages. However, in this case, you can get yourself a construction loan that you can use to finance the whole process. The first thing you need to know is that there are several types of construction loans.

Getting a loan is not always easy, and it takes serious consideration on your part to make sure that it works for you. If not, you could get into serious financial trouble and, in this case, lose the property you’ve built. This is why it’s important to learn which types of construction loans are out there and find the option that suits you.

We will separate these loans into two categories, residential and commercial.


Construction loan with a mortgage

With this loan, you will get the money to build your home, and once completed, it will be mortgaged. It’s important to understand that the interest changes during construction and after the house has been completed. In some cases, the borrower has to pay a penalty in case the construction lasts more than a year. The borrower also bears closing costs.


This loan is given to borrowers for a maximal period of 1 year. While the construction is ongoing, the borrower pays an appropriate interest on the total loan amount. The whole loan is divided into installments, which are given periodically, while the interest rates keep getting bigger with each new installment.

When the construction period has finished, the borrower/owner gets a home mortgage and is obligated to pay off the loan. The construction-only loan is better because the borrower doesn’t have to get the mortgage from the same lender that gave the construction loan.

VA loans

A VA loan is a mortgage loan which is backed by the United States Department of Veterans Affairs, and that’s where the VA loan name comes from. This loan is only available to people who are military veterans, reservist, or current members of the military.

Apart from using it to fund new constructions, a VA loan can also be used for buying homes, condominiums, and other residential properties.

VA loan rates move from about 3,5% and up to 4%, depending on the years of the fixed loan. All qualified lenders in the US can issue VA loans. The VA loans can go up to 100% of the costs required to construct a home.


Joint venture loans

With these loans, the borrower and the lender enter a joint venture together. This means that they will both be owners of the property and the business when finished and share their profits or losses accordingly.

Take-out loans

Take-out loans are permanent and can be tricky to explain, so we will use an example. In a situation where a builder wants to construct a residential building and is given a loan by the lender, once the project is completed the buyer(s) of the building or the apartments get take-out loans provided by the same lender. The builder also becomes a loan seller and gives his buyers the take-out loan.

Development and acquisition loan

These kinds of loans are resewed for covering the costs of buying new land for construction, as well as all the necessary horizontal improvements that need to be done on that land. These improvements include things like paving the ground, building roads, leveling the land, adding a sewer system, installing electrical systems, and so on.

However, these loans don’t cover all these expenses, and it is required that the borrower invests some money as well. In most cases, the builder needs to cover at least 25% of all the costs of developing the land.

These are some of the most common construction loans, but there are more different options available. When trying to get a construction loan, the most important thing to remember is that you need to improve your credit score. Having a poor one means you will have a difficult time convincing lenders to give you the loan, and if they do, you will get terrible conditions.

VA Loan requirements for homes: Things you should know before applying for VA Loans

A booming demand has been noticed for Veterans Affairs mortgages which are commonly known as VA loans.  These mortgages generally do not require a down payment and are accessible to both military veterans and active military veterans.  Mortgages insurances are not required as VA loans are made through private lenders and are guaranteed by the Department of Veterans Affairs. Also, there is no minimum credit score requirement. VA Loan requirements are easier to qualify than the conventional mortgages as it remains one of the few mortgages options for borrowers who doesn’t want to have down payment. The Department of Veterans Affairs not a direct lender. The loan is generally made through a private lender and partially guaranteed by the VA as long as the guidelines are met.

Requirements for VA Loans:

There are precisely two categories for VA Loan requirements for homes: wartime and peacetime. A potential home buyer must satisfy only one of the service requirements that have been set forth by the Department of Veterans Affairs in order to be eligible for a VA Loan. Service Members and Veterans of the United States Military receive their VA Home Loan Benefit. VA Loan Requirements for homes eligibility depends upon their service.
  • Active Duty Military Those on active duty must have at least 90 continuous days of service.
  • Veterans The veterans who are discharged from active military duty must have served at least 181 days on active duty. Although if they do not meet the minimum service requirements there are chances that they may still be eligible. The chances are if they were discharged due to hardship or expediency of the government or cutback-in-force, certain medical circumstances or a service-related disability.
  • Current National Guard and Reserve Members The members of the National Guard or Reserves must serve at least six years.
  • National Guard and Reserve Members called to active duty For those members of the National Guard or Reserves called to duty under Title 10 must serve at least 90 days.
  • Spouses In some instances, a spouse of a veteran is eligible for VA Home Loan Benefits.  Also, the un-remarried spouses of veterans died on active duty or from a service-connected disability are eligible.

VA Loan Certificate of Eligibility:

Applicants also require a Certificate of Eligibility (COE) after meeting the basic service requirements. The VA approved lenders use this certificate to verify the eligibility of the candidate for home loan benefits. The COE is not required to start VA Loan Requirements for homes process. Advantages of VA Loans: VA Loan Requirements for homes is a major loan program for many veterans, service members, and military families. Home requirements for VA loan are flexible, government-backed loans that come with significant benefits of homeownership to veterans who otherwise thrash about obtaining finance for a home. The major benefits of Home requirements for VA loan are that it requires no down payment or private mortgage insurance. They provide characteristic competitive rates and terms which allow capable borrowers to purchase a home effortlessly. The signature benefits of VA Loan Requirements for homes are discussed below:

1. No down payment

It is difficult for service members to buy money and earn credit as they constantly are on the move. With the Home requirements for VA loan, the qualified borrowers can finance cent percent of the home’s value without struggling with their pocket.

2. No Private Mortgage Insurance

The conventional lenders are required to pay private monthly mortgage insurance by the borrowers unless they are able to put down at least 20 percent. This task is difficult for many veterans. But with a VA Loan, there is no PMI as the federal government backs all VA Loans. VA Loan is advantageous as it allows the veterans to build more equity in their house along with successfully saving thousands of dollars over the mortgage.

3. Competitive Interest Rates

Assuming the risk on housing the banks finance the loans and interest rates on loans. The VA backs the Home requirements for VA loan with a guaranty thus the financial organizations carry less hazard and offers lower interest rates which are typically 0.5 to 1 percent than the conventional interest rates.

Additional Benefits

Basic Allowance for Housing The VA loans provide Basic Allowance for Housing (BAH) for qualified active military members. The Basic Allowance for Housing can be accounted as an effective income, which allows them to pay some or all of their monthly mortgage costs. No Pre-Payment Penalty As there are different types of loans, paying off a home loan before it matures results in a pre-payment penalty. The VA Loan allows borrowers to pay off their home loan their desired point without any worry regarding a pre-payment penalty.

Great Tips to help you with your VA Loan

Great tips to help you with your VA Loan.

Buying a home using your VA loan benefits can be one of the most exciting transactions you’ll ever make. But it can certainly come with moments of frustration and uncertainty. Maybe that’s not entirely unsurprising when you’re talking about a six-figure purchase. The highs and lows of the homebuying process are often amplified for first-time homebuyers. There’s a whole new language littered with strange acronyms like GFE (Good Faith Estimate), APR (Annual Percentage Rate) and MPR (Minimum Property Requirements). Loan officers and underwriters are asking for pay stubs, tax returns and other documents you haven’t touched in years. And there’s a joy and sense of accomplishment when a seller accepts your offer that’s tough to find outside the world of homebuying. The reality is this doesn’t have to be an emotional roller coaster. Sure, hiccups and unexpected issues can and do arise. But both experienced and first-time military homebuyers who come into the process with some education and preparation in hand are setting themselves up for the best possible experience. Here’s a look at 28 must-read VA loan tips to help VA homebuyers get the most from their hard-earned benefits. GET STARTED WITH YOUR VA LOAN REQUEST

Tip 1: Start Without a COE

You don’t need to have your VA Certificate of Eligibility to start the VA loan process. It’s common for lenders to get this document for you a little later down the road. By all means, you can certainly obtain yours if you’re concerned about your entitlement amount or just feel better having proof of your benefit. Using the VA’s eBenefits portal is typically the quickest way when possible. But don’t let the absence of your COE stop you from contacting a VA approved lender like Security America Mortgage to start the prequalification and preapproval process.

Tip 2: Scour Your Credit Report

Your credit profile will play a crucial role in your ability to land a home loan and the type of rates and terms available. Before you pursue loan prequalification, get a free copy of your credit report.  Examine it with an eagle eye for errors, which can be anything from accounts that aren’t yours to reporting errors regarding late payments. About a quarter of all credit reports contain errors serious enough to derail a home loan, according to the U.S. Public Interest Research Group.

Tip 3: Your Credit Score Isn’t Your Credit Score

Your free credit report will not contain your credit score. This is something you have to pay to see, and as far as mortgages go it’s often best to not waste your money. That’s because lenders see different scores than consumers, and they use a formula weighted especially for mortgage lending. What your loan specialist pulls can and often does look different from the “consumer” score you shelled out money to see. The only way to really know where you stand is to have a lender pull your credit.

Tip 4: Job Gaps are a Problem

Lenders ideally want to see you’ve had your job for at least two years. That’s not always feasible, especially for veterans who recently separated from the military. So it’s possible to have fewer than two years and still secure financing, but it’ll require a closer look by your loan specialist. They’ll want to see continuity between your previous work, education, MOS or experience and your current employment. But even if there is continuity, if there was a gap of unemployment you’ll likely need to wait until you’ve been back to work for a certain number of months — the length can vary by lender and often corresponds to the duration of your job gap.

Tip 5: Not a One-Time Benefit

Once you earn the VA home loan benefit, it’s yours for life. This isn’t a one-time lending option or a program exclusively for first-time homebuyers. You can use these benefits over and over again. In fact, it’s possible to have more than one VA loan at the same time. So don’t let anyone claim you’re ineligible because you had a VA loan a decade ago. You may even be able to get another VA loan after defaulting on a previous one.

Tip 6: Preapproval is Key, But It’s Not a Guarantee

There isn’t a ton of sense in looking for homes before you’ve got a clear idea of what you can afford and how much a lender is likely to extend. VA loan prequalification and preapprovalwill help with exactly that. Preapproval in particular is important in that it shows sellers you’re a serious candidate who’s likely to make it to closing day. A prospective VA homebuyer with a preapproval letter is a welcome sight among home sellers and real estate agents. Right now is the time to get started on your VA loan application.

Tip 7: Stick With Your Budget

Your preapproval amount isn’t a suggestion. It represents the ceiling of what you can afford based on your current financial situation. It’s easy to get caught up in the excitement of the home search. But remember: Just because you’re preapproved for up to $250,000 doesn’t mean it’s in your best interest to purchase a $250,000 home. Homeownership comes with an array of new expenses, from homeowners insurance and property taxes to maintenance costs and more. VA loans have some safeguards in place to help veterans avoid becoming “house poor,” but it’s something you should consider from the outset. VA loans are an incredible benefit for those who’ve proudly served our country. They’re also a specialized product that some real estate agents and lenders are more familiar with than others. You don’t want a novice in your corner when the time comes to utilize these hard-earned benefits. A real estate agent who understands the promise and potential of this program can save you time and money in a host of ways. One of the most important is by steering you away from properties that could pose problematic for the VA appraisal process, which can save borrowers time and money. Check out Security American Realty for help finding an agent near you.

Tip 9: Shop Around Without Killing Your Credit

It’s always a good idea to compare costs, VA loan rates and terms from multiple lenders. Those don’t always have to be the deciding factors, although they’ll certainly play a significant role. It’s true that a “hard inquiry” on your credit can cause your score to dip a few points, but it doesn’t happen every time. More importantly, the credit bureaus will treat multiple inquiries from mortgage lenders within a month or so as just one single pull, rather than have each one possibly drag down your score. That allows you to shop around with confidence.

Tip 10: Avoid Future Appraisal Nightmares

The VA wants veterans purchasing homes that are “move-in ready.” To that end, independent VA appraisers have to make sure your home purchase meets a set of minimum property requirements as part of the VA appraisal process. Any defects or issues noted by the appraiser have to be completed before the loan can close. The issue is you — the veteran purchasing the home — can’t be the one to make those changes. That’s why fixer-uppers and questionable foreclosure properties are so difficult. You also want to be careful regarding unique properties (log cabins, geodesic domes, large acreage) for which it can be tough to find good comparable recent home sales. A good real estate agent who understand the VA program can help you avoid properties that are likely to pose problems during the appraisal process.

Tip 11: You Will Need Money Up Front

Nine in 10 VA homebuyers purchase without making a down payment. It’s also not uncommon for the seller to pay all of your closing costs. But you’ll still need money up front to cover things like an earnest money deposit, the appraisal and a home inspection. You may get all of that money back at the closing table.

Tip 12: How to Tweak Your DTI Ratio

This one is simple enough that you might not even think about it at first. The VA wants borrowers to have a debt-to-income ratio (DTI ratio) of 41 percent or less. If you’re uncertain about the health of your DTI ratio, don’t head into the loan process wedded to a specific loan amount. Lenders calculate that ratio using the anticipated monthly mortgage payment for the loan amount you’re seeking, including taxes and homeowners insurance. If your DTI ratio is too high, one way to bring it down is to simply seek a lower loan amount. You can play with the numbers until they work, provided you can still find what you want at a lower price point. Otherwise, you’ll need to come up with additional income sources.

Tip 13: Understand Residual Income

Residual income is an incredibly important financial requirement unique to VA loans, and it’s a major reason why no other loan program has had a lower foreclosure rate over the last five years. The VA wants veterans to have a minimum amount of money left over each month after the mortgage payment and other major expenses in order to cover everyday expenses like gas, groceries, health care and more. The benchmark varies by family size and geography. Heading into the VA loan process it’s important to understand that you’re going to have to meet this guideline. This is another area where you may have to tweak your desired loan amount to make the numbers work.

Tip 14: Contract Contingencies

Work with your real estate agent to make sure the offer you make on a home includes contingencies that protect you. One common contingency is to stipulate that you get your earnest money back if you decide to walk away because of a problematic home inspection. Another is to make the purchase contingent upon your ability to sell your current home.

Tip 15: Always Get a Home Inspection

This is more of a rule than a tip. We’re talking about one of the biggest investments of your life. Why wouldn’t you want a clear look at what you’re getting and any problems lurking in the shadows? The home inspection allows you to renegotiate items with the seller and helps ensure you don’t purchase a lemon of a house. Unlike the appraisal, a home inspection isn’t mandatory. But you should think of it that way.

Tip 16: Figure Out Occupancy

The VA program has occupancy requirements because it’s a program for primary residences. Generally, you’re supposed to occupy the property within 60 days of closing. A spouse can fulfill the requirement, which is one of the ways deployed or otherwise unavailable military members can purchase homes while serving. But this requirement can present obstacles for married couples who might need one spouse to stay behind, or for military contractors who spend the majority of the year living abroad. If you and your co-borrower are expecting some potential occupancy issues, talk through them with your loan specialist as soon as possible.

Tip 17: There’s No Cap on Seller-Paid Closing Costs

You can ask the seller to pay all of your closing costs, regardless of the the total amount. The VA does cap what a seller can contribute in concessions — which are things like paying your prepaid taxes and insurance or the VA Funding Fee — at 4 percent of the loan amount. But feel free to ask for the moon when it comes to the closing costs. There’s no guarantee the seller will bite, but you won’t know if you don’t ask.

Tip 18: “No Closing Cost” Loans Still Cost You

Mortgages are a product and people in the industry don’t work for free. There are always going to be costs that come with securing a home loan. It’s more a matter of who pays them and how. Lenders offer “no closing cost” loans because they still make money on them — off of you, to be more precise. The reason you don’t pay closing costs on these is because the lender pays them for you. Here’s how: The lender covers those additional costs by giving you a higher interest rate, which you’re stuck with for the life of the mortgage or until you refinance. That means you’re paying more each month.

Tip 19: Few Lenders Will Finance New Construction

You can absolutely use the VA loan program for new construction. But you will likely struggle to find a VA lender willing to actually front the money to pay for the home to be built. There’s a lot of risk involved in homebuilding, and risk isn’t something lenders look to tackle. So what’s more common is you’ll need to get a short-term construction loan from a homebuilder or another financial institution to actually fund the home’s construction. Then you’ll refinance that short-term loan into the VA program using what’s called a construction-to-permanent refinance. You may not want to spend a ton of time looking for VA lenders willing to pay for construction, and instead start searching for the right builder.

Tip 20: A Recent Late Mortgage Payment Could Be Trouble

Lenders may want to make sure you haven’t had a 30-day or more late payment on your mortgage (or even rent in some cases) in the last 12 months. So if you slipped up four months ago, you might need another eight consecutive months of on-time payments before being able to pursue a VA home loan.

Tip 21: You Can’t Borrow Extra Money

Unfortunately, you won’t be able to ask the lender for an extra $15,000 to make renovations or upgrade the kitchen. They’re going to lend whichever is less between the purchase price and the appraised value of the property. So if you agree to purchase a home for $150,000 and the appraised value is $160,000, you’re going to get $150,000 (Note: You don’t magically have $10,000 in equity). Conversely, if it’s a $150,000 purchase but the appraised value is $140,000, you’ll need to renegotiate with the seller or make a down payment to cover that $10,000 gap. The only exception here is if you pursue an Energy Efficient Mortgage (EEM), which allows qualified borrowers to add up to $6,000 in energy-efficiency improvements.

Tip 22: Don’t Change Jobs or Make Big Purchases During the Process

Once you’re under contract on a home change is not your friend. Lenders need to see stable, reliable income streams that are likely to continue. A job or career change during the loan process can derail your purchase. Likewise, lenders want to make sure your credit profile and assets remain steady while you’re waiting for the underwriting process to wind down and the issuance of a clear-to-close. Putting a bunch of furniture on a credit card or buying things like a car or a boat before your loan closes will set off serious red flags and may kill your loan immediately. You can absolutely use your VA loan benefits to purchase a foreclosure or short sale. But properties that are in disrepair or that have sat vacant for a while may prose a problem. We mentioned earlier the VA’s Minimum Property Requirements, which are broad health and safety issues that need to be met to satisfy the VA appraisal process. Some foreclosures are in better shape than others. Homes in need of repair or renovation will likely trip the MPRs, and at that point it’s tough to get a bank or a seller to make repairs on a foreclosure, which must be completed before the loan can close. Again, these aren’t fixes that you as the buyer can pay. You’ll want to make sure any foreclosure you’re considering is likely to make it through the VA appraisal process — this is where a VA-savvy real estate agent can make a huge difference.

Tip 24: If You’re Buying a Condo, Start Looking Now

Condos are another acceptable property type for your VA benefits. The only potential wrinkle is that the condo development needs to be on the VA’s list of approved condominiums. Thousands already are, but it’s possible the one you’ve fallen in love with isn’t yet. It’s possible to get condo developments added to the VA’s list, but that process can take time because the department needs to review condo documents and other information. So if you’re interested in purchasing a condo keep this in the back of your mind, especially if you’ve got a tight timetable for purchasing.

Tip 25: Save Several Months of Reserves For a Multi-Unit Property

Qualified VA borrowers can purchase up to a four-unit property provided they live in one of those four as their primary residence. But in some cases you may need several months of reserves in the bank when purchasing these types of properties. Reserves are basically extra cash on hand equivalent to the cost of your total monthly mortgage payment including taxes and insurance. So if the mortgage payment is $1,500 per month and a lender wants you to have at least three months of reserves, you would need $4,500 on hand as a safety net.

Tip 26: Community Property States Can Be Tricky

There are nine community property states where lenders can check your spouse’s credit score even if he or she isn’t going to be obligated on the loan. Some lenders won’t actually require a non-purchasing spouse to meet their credit score requirement. But they likely will count that spouse’s debts in the borrower’s overall debt-to-income and residual income calculations. Non-purchasing spouses may be able to offset their debt by providing documentation about their income.

Tip 27: Have Two Years of Tax Returns if Employed by Family or Family-Owned Business

Self-employed veterans will almost always need to provide at least two years of tax returns to properly document their income to a VA lender. That’s just the nature of self-employment, which isn’t always stable and reliable. But you’ll also likely need two years of tax returns if you work for a family-owned business or are otherwise employed by a family member. Lenders want to see a consistent, sustained pattern of income over time, especially given the potential conflict of interest. You may be able to count as effective income any child support you receive, but it’ll likely need to meet some lender requirements. Generally, lenders are going to want to see a sustained pattern and a likelihood that the support will continue for at least a few years after the loan closes. You’ll likely need to have been receiving it for at least three months if not more. On the flip side, if you pay child support that outlay will be counted in your debt-to-income ratio and residual income calculations.