VA Loan Question (PMI, loan officer, fixed rates, interest rate)

[jojo7]

I have a unique situation and was wondering if anyone could help. We are purchasing a home and would like to apply for a VA loan since we will only putting 5% down. VA usually offer good rates and we can avoid the dreaded monthly PMI which is why we would like to go the VA loan route. My situation is this..... we live in corporate housing. The house we live in is provided by my husband's employer, therefore, we don't pay rent and we don't own any real estate. We want to purchase a home to use as a weekend get-a-way type of home for now that would be paid off before retirement (which isn't for 20 years). When I read the VA website they indicate the home must be your permanent residence. I haven't talked with a loan officer yet but was wondering since we don't own or rent could this home still be considered a primary residence? Would a FHA loan be just as good? We do have very good credit and solid employment history. The only thing we don't have is a big down payment.

[thechappells]

as i was told during my separations briefings, YOU must live in the house at least the first year to use the VA loan guarantee (anyone, please correct me if i'm wrong).

when i was living overseas, my plan was to buy a house in the U.S. using my VA benefits and rent it out until i returned. needless to say, i put those plans on hold until we returned to the states and have settled in. we are purchasing our first home this summer using the VA.

[mrsclmn]

Well, I'm no mortgage broker but I would assume that since you have to sign papers saying that you will occupy the home within 60 days and it will be your primary residence there's no way around it, unless you willingly lie, which I wouldn't suggest. Also, if you are going to take advantage of the first time homebuyer tax credit it has to be your primary residence as well. I'm not sure if FHA has occupancy requirements as well, but you can get an FHA loan with as little as 3.5% down.

[Daddys///M3]

I am assuming that the home is nowhere near where you are currently living. If that is the case then there is no way that anyone will consider it your primary residence. All an underwriter has to do is look at the work address, the current address, and the address of the proposed property to shoot that one down.

VA/FHA both have occupancy requirements. Neither program will insure a mortgage to secure a second/vacation home. There are lenders that will do this as a vacatin home with 10% down though, and the rates will be pretty much the same as any conventional loan, but FHA or VA will be a no go on this scenario.

[jojo7]

Thank you for the replies. I didn't realize that FHA loans have the same rules. The house location is probably a little more than an hour away from my husband's job, however, I won't lie just to get a loan. I won't even consider that as an option. Are there any other loan options with only 5% down since FHA is not an option? or I can assume just a higher interest rate with a small percentage down?

[Daddys///M3]

Unless it will be a primary residence I can't see anyone lending with less than 10% down.

[jojo7]

Do lenders allow you to finance closing costs and if so, is the 10% down payment just for the home sale amount and can I have the lender add the closing costs to the loan? or Is it 10% down the total amount borrowed which would include the closing costs and sale of the home?

[Daddys///M3]

No you cannot finance closing costs. You could, however, ask the seller to cover your closing costs.

[jojo7]

Originally Posted by Daddys///M3

No you cannot finance closing costs. You could, however, ask the seller to cover your closing costs.

Thanks so much. You have been very helpful in educating me in this process.

[deuterdu]

VA is a no go. FHA will allow second home financing under the following circumstances: When the appropriate Home Ownership Center (HOC) agrees that an undue hardship exists, meaning that affordable rental housing that meets the needs of the family is not available for lease in the area or within reasonable commuting distance to work, and the maximum loan amount is 85% of the lesser of the appraised value or sales price.

Fannie Mae is limited to 90% financing on a second home (buy a cheaper home) and Freddie Mac is limited to 85% on a second home for fixed rates. If you choose an adjustable rate through Fannie or Freddie then 15% is the minimum down payment.