California VA Loans: Top 10 Frequently Asked Questions

As a mortgage company that specializes in VA home loans, we receive a lot of questions about that program. Today, we will provide answers to ten of the most frequently asked questions relating to California VA loans.

1. VA loans allow eligible military members and veterans to buy a home with no down payment.
2. These loans are backed by the Department of Veterans Affairs but issued by private lenders.
3. Most VA loans do not require mortgage insurance, making them more affordable.
4. Lenders determine how much you can borrow by analyzing your income and debt.
5. VA loans can be used multiple times if previous loans are paid off or eligibility is restored.
6. Borrowers need a Certificate of Eligibility (COE) to start the application process.

California VA Loans: Top 10 FAQs Answered

1. What is a VA loan, exactly?

A VA loan is simply a home mortgage loan that gets guaranteed by the Department of Veterans Affairs. It is one of the main types of government-backed mortgage loans, along with the FHA and USDA programs. This program is limited to military members, veterans, and in certain cases their qualifying spouses.

2. How does the program work?

As mentioned above, VA loans receive a partial guarantee from the federal government through the Department of Veterans Affairs. But the actual mortgage loan is generated by a lender in the private sector, just like other types of loans.

If the borrower defaults (or fails to repay the debt), the lender receives some degree of compensation from the government. As a result of this federal backing, California VA loans tend to have some of the most flexible qualification criteria of any type of mortgage.

Here’s how the Department of Veterans Affairs describes the program:

3. What are the pros and cons of a California VA loan?

There are plenty of pros, but very few cons associated with this program.

One of the biggest benefits is that home buyers in California can use a VA loan to finance 100% of the purchase price. This means you don’t need to make a down payment, unless you want to.

Additionally, most borrowers who use this program can avoid the extra cost of mortgage insurance. This program also offers flexible approval criteria for borrowers, due to the government guarantee mentioned above.

As for downsides, there really aren’t any. And that’s by design. This program was designed to benefit military members and veterans, without introducing any significant disadvantages.

4. Do I need to make a down payment on a California VA loan?

No, in most cases borrowers are able to buy a house with no money down whatsoever.

That’s the number one advantage associated with California VA loans, especially when you consider the expensive nature of our real estate market. This benefit eliminates what is often the biggest hurdle to homeownership.

You can make a down payment if you want to, perhaps to lower your monthly payments or build equity. But in most cases, it’s not necessary or required.

5. How much money can I borrow?

The Department of Veterans Affairs does not put a limit on the amount of money you can borrow. They generally leave that up to the mortgage company that originates the loan.

Lenders make these decisions by evaluating your current debt and income situation. Generally speaking, the higher your income, the more money you can borrow with a California VA loan.

The underwriting and approval process is designed to ensure you’re not taking on too much debt, with the addition of a home loan. Because that wouldn’t be in anyone’s best interest.

6. Am I eligible for a California VA loan?

If you’re an active-duty service member and have served for at least 90 days, you’re probably eligible for the program. Most veterans are eligible for a California VA loan as well.

National Guard members and Reservists could be eligible after six years of service, or after 90 days of active-duty service.

You can find the full eligibility requirements for a VA loan on the Department of Veterans Affairs website. We can also help you determine your eligibility, if you plan to buy a home in California.

7. What are the minimum requirements?

As mentioned above, you must have sufficient income to cover your monthly mortgage payment and all of your other recurring debts. A down payment is not required in most cases.

It helps to have a decent credit score as well. But you don’t necessarily need “perfect” credit to qualify for a VA loan in California.

As mentioned above, this program has some of the most flexible qualification requirements of any mortgage option available today. So don’t hesitate to apply.

8. Can I use a VA loan more than once?

Yes, in most cases borrowers are able to use their VA loan privilege more than once. If you sell the house and pay off the mortgage, you will essentially restore your program “entitlement.” This allows you to use the program again in the future.

We’ve written a separate blog post about using this program more than once. So be sure to refer to that article, if you have additional questions about it.

9. What kind of house can I buy with a VA loan?

There are many different types of properties that can be purchased with a California VA loan. These include a typical detached home, a condominium, a townhouse, a duplex or triplex style home, new construction, a mobile home, etc.

Generally speaking, you cannot use a VA loan to buy an open lot (without a house), a farm, or a vacation / second home.

Just note that the property has to meet some basic health and safety guidelines, in order to be approved. So a rundown “fixer upper” type of house might not qualify for a standard VA loan in California.

10. How do I apply for a loan and start the process?

To apply for this program, you must first obtain your Certificate of Eligibility. This is a government document provided by the Department of Veterans Affairs. It tells the mortgage lender that you are in fact eligible for the program.

Once you’ve obtained this document, you can submit a standard home loan application to get the process rolling.

It’s also a good idea to get pre-approved for a mortgage amount, before you start shopping for a house. This will allow you to narrow your search to a specific price range, based on your financing capacity.

Have Additional Questions About the Program?

Here at Bridgepoint Funding, we are passionate about this program because it rewards our brave service members. We are approved by the Department of Veterans Affairs to originate VA loans in California.

Our knowledgeable staff can answer any questions you have about using this mortgage program. We can also help you determine your eligibility and get pre-approved for a specific mortgage amount, if you’re eligible.

Please contact us if you have questions about California VA loans, or if you would like to start the process. We look forward to helping you!