Have you found a house that meets your needs and expectations? Congratulations! It’s time to close the deal, but before that, do you want to secure the financing? Are you thinking of taking a VA loan? That’s a good choice.
Have you scheduled a home inspection yet? Nope? Well, a home inspection is not required to qualify for a VA loan in California. But, it’s highly recommended for several reasons—we will discuss some of those ahead—but you should know that a VA appraisal is a must for these loans. The appraisal helps determine the property’s true value and ensure that it meets the VA’s Minimum Property Requirements (MRPs). A home appraisal focuses on the home’s basic safety standards, not just the value. However, it doesn’t thoroughly examine the property’s condition as a home inspection does.
So, although a VA loan home inspection is not required, it can uncover potential issues affecting the home’s value, safety, and livability. This allows you to negotiate repairs or adjust the asking price with the seller before finalizing the deal. Most of all, if the appraiser finds the property of little value, the worst thing that could happen is that you are not getting the loan.
So, before applying for a VA loan, it’s better to research and learn more. In this blog, we will discuss the requirements of VA loans in California, the loans’ key features, and why a home inspection is recommended.
Requirements for VA Loans In California
You must meet specific eligibility requirements when applying for a VA loan in California. The requirements are based on your military service, creditworthiness, and how you plan to use the loan.
Service Requirements
Service requirements for VA loan eligibility vary based on military status. If you’re an active duty service member, you must have served for at least 90 consecutive days during wartime or 181 consecutive days during peacetime. You must also have been honorably discharged after serving the same durations.
In another case, if you’re a reservist or National Guard Member, then you’re eligible for a VA loan if you have completed a minimum of service (same duration as above) in the following:
- Army National Guard
- Army Reserve
- Air National Guard
- Coast Guard Reserve
- Navy Reserve
- Marine Corps Reserve
- Air Force Reserve
Let’s say you are the surviving, un-remarried spouse of a service member who died while in service from a service-related disability or if the service member is classified as missing in action (MIA) or a prisoner of war (POW). In such a case, you’re also eligible for the loan.
Credit and Income Requirements
The next factor is credit and income, but the VA doesn’t set a minimum credit score for eligibility in California. Most lenders typically look for a score of at least 620, but some might also accept scores as low as 500, depending on different factors.
Additionally, the lenders will also verify your income. Of course, it must be stable and sufficient to cover the mortgage and other obligations, generally preferring at least two years of employment history. Plus, lenders must confirm that you have enough residual income after paying your mortgage and other debts, with the required amount varying based on family size and location.
Property Requirements
When getting a VA loan, you must acknowledge the property requirements. If you plan to invest in the property but don’t wish to reside there, then a VA loan is a big No! The loan could only be used to buy a primary residence and is not applicable for investment properties or a second home. Also, as discussed above, the property will go through a VA appraisal to ensure it meets the livability and safety standards.
Additional Requirements
Once you meet all the above-mentioned requirements, you need to meet additional requirements, such as securing a Certificate of Eligibility (COE). This certificate verifies your eligibility. You can request it online through a lender or by mail.
Moreover, you are required to pay a one-time funding fee to cover the loan’s cost, with the fee varying depending on the military category or the down payment. Can you waive this fee? Yes, but there are certain conditions for that, such as:
- You are a California Veteran getting VA compensation because of service-related disabilities.
- You are receiving VA compensation due to service-related disability if you’re already not receiving retirement pay.
- You are receiving loans as a spouse of a veteran who passed away either because of service-related disabilities or in service.
Key Features of VA Loans In California
No Down Payment
VA loan in California allows you to finance 100% of the home’s value without the need to save for a substantial upfront payment. This way, there are fewer hurdles (approximately zero) between you and your home. Without needing a down payment, a VA loan makes it easier for you to achieve your homeownership dream and invest in your future. This benefit is especially valuable in high-cost areas where saving for a traditional down payment can be challenging.
No Private Mortgage Insurance (PMI)
Another major benefit of VA loans in California is the elimination of PMI, which is usually required for conventional loans when you put down less than 20% of the home’s value. With no PMI, you can enjoy lower monthly mortgage payments. Honestly, this will definitely make homeownership affordable, as it will save you hundreds of dollars every month.
By removing the burden of PMI, VA loans provide substantial financial relief and enhance the overall affordability of a home, particularly in a high-cost state like California.
Flexible Credit Requirements
VA loans are accessible to a broader range of borrowers than conventional loans. While many lenders typically prefer a minimum credit score of around 620, VA loans can accommodate lower scores, often down to 500, depending on other qualifying factors.
How Does a Home Inspection Help?
Now, we will move to the part where we determine the role of home inspections. If they are not required, then why are they recommended?
That’s because of the role they play in securing a VA loan. Once the home inspector assesses the home’s condition, they ensure that the property meets the necessary safety and livability standards. While the VA appraisal assesses the home’s value and confirms that it meets the VA’s Minimum Property Requirements (MPRs), a VA loan inspection provides a more detailed examination of the property’s condition.
By identifying potential issues, home inspection enables you to address these concerns before finalizing the purchase. These issues could be:
- Structural problems
- Plumbing issues
- Electrical hazards
Remember: the list doesn’t end here; more issues could be found during the VA home inspection.
This proactive approach helps you negotiate repairs or price adjustments with the seller and ensures that the property is safe and suitable for living, which is essential for VA loan approval. A thorough home inspection can provide peace of mind for you and the lender, facilitating a smoother loan approval process and protecting the investment in the long run.
Conclusion
Just so we’re on the same page, a home inspection is not a requirement for securing a VA loan in California. However, it is a crucial step in the home-buying process that can provide invaluable insights into the property’s condition. By identifying potential issues early on, you can negotiate repairs or price adjustments, ensuring that the home meets the safety and livability standards required for loan approval.
Coupled with the benefits of VA loans, conducting a thorough home inspection can help you make an informed decision and pave the way for a successful homeownership experience. Whether you’re a veteran or an active-duty service member, understanding the nuances of VA loans and the importance of home inspections will empower you to navigate the buying process with confidence.
Ready to ensure your dream home is safe and sound? Contact Elite Inspections today to schedule your comprehensive home inspection! Our team of experienced professionals is dedicated to providing you with detailed insights and peace of mind. Don’t leave your home purchase to chance—let us help you make informed decisions. Call us now or visit our website to book your inspection!
