VA loans are an attractive mortgage option for many home buyers. This loan type can offer several benefits to qualified borrowers. Let’s explore the qualifications you must meet and the benefits of a VA loan in Hawaii.
The Best VA Lenders in Hawaii:
- Best Overall in Hawaii: Veterans United
- Best for Flexible Requirements: Quicken Loans®
- Best for Lifetime SUpport: Freedom Mortgage
- Best for In-Person Assistance: USAA
What is a VA Loan?
VA loans are one of a few home loan types guaranteed by the federal government. This means that if you default on your loan, the federal government may assume your mortgage debt. VA loans are guaranteed by the U.S. Department of Veterans Affairs.
The benefits of VA loans include:
- 0% down payment requirements
- No monthly mortgage insurance premiums or private mortgage insurance
- Limits on your closing costs
- Lower average interest rates than some other loan types
- No prepayment penalties
- Refinancing options to obtain lower monthly payments and interest rates
- Dedicated advocates to help homeowners avoid foreclosure
Requirements for a VA Loan
There are a few basic requirements you must meet to qualify for any home loan. Loans guaranteed by the federal government often require additional requirements. Here are some requirements specific to a VA loan.
Service Requirements
You must meet the service requirements set by the U.S. Department of Veterans Affairs to qualify for a VA loan. You may be able to receive a VA loan if:
- You served 90 consecutive days of active service during wartime.
- You served 181 days of active service during peacetime.
- You have 6 years of service in the National Guard or Reserves.
- You are the spouse of a military member who has passed away either in the line of duty or from a service-related disability.
Certificate of Eligibility
You must provide your Certificate of Eligibility (COE) to your lender at some point during your mortgage process. This certificate will prove to the lender that you qualify for VA loan benefits. To receive your certificate as a service member, you will need to have at least one of the following: Statement of Service, Report of Separation, Record of Service, Retirement Points Accounting or proof of character of service.
To receive a COE as a spouse, you will need to provide your marriage license, your spouse’s death certificate and a form obtained from the VA. The form you receive from the VA will depend on whether you receive Dependency and Indemnity Compensation benefits.
Income
The Department of Veterans Affairs has set income amounts that are required to qualify for a VA home loan. The VA requires you to maintain a certain amount of residual income each month after all of your major expenses are paid. This may include other debt payments, child support and/or alimony payments and so on. This requirement is set to ensure that you receive a sufficient amount of income to cover all of your financial obligations, including your new mortgage payments.
Credit Score
Anytime you apply for any home loan, your lender will take a look at your credit score. Your credit score is a 3-digit number that summarizes how well you pay back debt. It’s based on a number of factors, including the amount of debt you have and whether you make debt payments on time. Each lender you consider has a minimum credit score requirement. The minimum credit score requirement will vary depending on the lender and mortgage type.
Lender Specifics for VA Loans in Hawaii
It’s important to consider the best mortgage companies available to you when you begin the home-buying process. Here are some of the lenders that finance VA loans in Hawaii.
| Lender | Minimum Credit Score | Loan Servicing | Minimum Down Payment |
|---|---|---|---|
| Quicken Loans® | 620 | In-house | 0% |
| Freedom Mortgage | 620 | In-house | 0% |
| Veterans United | 620 | In-house | 0% |
| USAA | 620 | Outsourced | 0% |
| PennyMac | 620 | In-house | 0% |
Interest Rates for VA
You receive an interest rate when you take out a VA home loan. This interest rate determines the amount of interest you will pay with your monthly mortgage payments. Most lenders offer adjustable and fixed interest rates. It’s important to understand the pros and cons before you select the type of interest rate you prefer.
Adjustable-Rate Mortgages
An adjustable interest rate may change throughout the lifetime of your loan. This means that the interest rate that you receive when you finalize your loan will likely not be the rate you pay for the entire duration of your loan. Your interest rate will fluctuate depending on several factors, including the current economy and housing market. Ask your lender a few questions if you’re considering an adjustable-rate loan, including:
- How often can my interest rate change?
- How much will my interest rate and monthly payments vary with each adjustment?
- Is there a cap on how much my interest rate can change?
Fixed-Rate Mortgages
Fixed-rate mortgage interest rates stay the same throughout the life of your loan. Often, the fixed-rate option is a slightly higher interest rate compared to an adjustable-rate mortgage. However, this interest rate will not change throughout the duration of your loan. This means you can count on paying the same amount each month until you have finished paying off your loan.
Do You Need Mortgage Insurance?
Most lenders will require you to take out private mortgage insurance (PMI) if you put down less than 20% on your down payment. One of the major benefits of a VA loan is that you are not required to take out private mortgage insurance, no matter what your down payment is. This means that you have the opportunity to save more money throughout the lifetime of your loan compared to other mortgage types.
How to Apply for a VA Loan in Hawaii
Get a purchase quote or refinance quote to apply for a VA loan in Hawaii and review the eligibility requirements listed above. Apply for your COE through your online eBenefits portal or work with the VA-approved lender of your choice. Make sure that the lender you work with is VA-approved.
Once you’ve found your lender, it can assist you to complete the application process for your VA home loan.
4 Best Lenders for VA Loans in Hawaii
When seeking a lender for your VA loan in Hawaii, look for one that can offer you excellent customer experience. You’ll also want to find a lender that has worked with multiple VA loans. Here are some of our top picks for VA loan lenders in Hawaii.
- Current Service Members
1. Best Overall: Veterans United
Veterans United Home Loans understands the need for flexibility as you consider VA home loan applications.
Many lenders have a maximum debt-to-income ratio that they accept from their borrowers. This ratio compares the size of your monthly debt payments with the amount of gross income you bring in each month.
However, Veterans United Home Loans does not have a set maximum debt-to-income ratio on its VA loan products. If you’re worried about not meeting lender requirements, this might be a good lender to contact.
- Online Service
2. Best for Flexible Requirements: Quicken Loans®
Quicken Loans® is a favorite mortgage lender among many home buyers. It offers a wide variety of mortgage types, including VA loans. It offers an easy and streamlined preapproval and application process and helps you get into your home quicker.
Quicken Loans® is also committed to providing excellent customer service through representatives that are available to answer any questions you may have about your VA loan. Quicken Loans®’ website also offers resources to help you understand and guide you through the mortgage process.
- Custom Options
3. Best for Lifetime Support: Freedom Mortgage
Freedom Mortgage can help you finance your first purchase and also refinancing your home with VA loan products. Its Eagle Eye Pledge is unique — Freedom Mortgage helps you save money even after you’ve closed on your home. You’ll be able to keep an eye on interest rates and the value of your home.
It’ll also keep you updated on changes that can help you save money so you can choose the right product or service when the time is right. This special benefit makes Freedom Mortgage one of our top lenders for first time borrowers.
- Veterans and Direct Family Members
4. Best for In-Person Assistance: USAA
Are you the type of person who prefers to do your banking business in person? If so, USAA may be the right lender for you. Like many of its competitors, it offers competitive rates and multiple mortgage options for VA home loan customers.
Best of all, you can meet with an experienced loan officer in person to discuss your mortgage options and needs. USAA may also be able to offer you discounts for other insurance products if you choose them as your mortgage lender.
Is a VA Loan Right for You?
It’s important to find the right mortgage type when you purchase a home. If you meet the qualifications for a VA loan, it’s worth looking into. VA loans can help qualified borrowers save money by eliminating the need for a down payment and private mortgage insurance.
To get started on your mortgage process, talk to a few lenders and see which one can offer you the best rates for a VA loan.
Frequently Asked Questions
1) Q: How do I get pre-approved?
First, you need to fill out an application and submit it to the lender of your choice. For the application you need 2 previous years of tax returns including your W-2’s, your pay stub for past month, 2 months worth of bank statements and the lender will run your credit report. Once the application is submitted and processed it takes anywhere from 2-7 days to be approved or denied. Check out our top lenders and lock in your rate today!
2) Q: How much interest will I pay?
Interest that you’ll pay is based on the interest rate that you received at the time of loan origination, how much you borrowed and the term of the loan. If you borrow $208,800 at 3.62% then over the course of a 30-year loan you will pay $133,793.14 in interest, assuming you make the monthly payment of $951.65. For a purchase mortgage rate get a quote here. If you are looking to refinance you can get started quickly here.
3) Q: How much should I save for a down payment?
Most lenders will recommend that you save at least 20% of the cost of the home for a down payment. It is wise to save at least 20% because the more you put down, the lower your monthly payment will be and ultimately you will save on interest costs as well. In the event that you are unable to save 20% there are several home buyer programs and assistance, especially for first time buyers. Check out the lenders that specialize in making the home buying experience a breeze.