If you’re an active or former member of the armed forces and you meet specific criteria for length and time of service, you can get a no-down payment loan guaranteed by the Department of Veterans Affairs, also known as a VA loan. Many veterans don’t even know they have this option available to them.

In addition to not needing a down payment, you do not have to pay mortgage insurance with a VA loan. The home must be for the purchase of your primary residence, as opposed for an investment property. There is a funding fee that comes with this loan, around 2 percent of the loan, which can be rolled into the loan amount. Under certain circumstances, such as a service-related disability, this funding fee can be waived.

In November of 2015, MassHousing announced a wonderful program for veterans and active duty military that makes it substantially easier for them to obtain mortgages. Some of the program’s benefits include non-spouse co-borrows are now able to be co-signors, rental income is allowable for 2 family home purchases. Condominiums are not required to go through the rigorous VA approval process.

In order to qualify, you have to show that you have the ability to pay the loan amount. The VA qualifying standards include debt-to-income ratio, your income, and FICO scores. Additional qualifying requirements may vary by lender.

The debt-to-income figure is a ratio of your debt to your income.  The VA prefers a debt to income ratio of less than 41%. But exceptions can be made under certain circumstances.

To reduce delays in the processing of the loan, you should be prepared to give the lender the complete names and addresses and your employee identification numbers for present and past employers covering a 2 year period. You should also have your account numbers for savings and checking accounts and all open and recently closed debts on hand.

Credit requirements for VA loans are more lenient than for conventional loans. If you’re a veteran with no credit history it’s generally acceptable to use “non-traditional” credit to show you can pay bills on time. Some examples of “non-traditional” credit would be utility, phone, or car insurance bills.

You do not need to go to the Department of Veteran Affairs to get a VA loan. The Department of Veterans Affairs doesn’t lend money, they just guarantee the loan. You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. You will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan. Lenders set their own interest rates, discount points, and closing points. You should shop around for the best rates.

Mortgage loans above the conforming loan limits set by Fannie Mae and Freddie Mac are called jumbo loans. They are also known as non-conforming loans. The conventional loan limit in most counties in eastern Massachusetts for a single-family home is $688,850, so if a borrower wants to purchase a home priced above this amount, they must apply for a jumbo loan. Jumbo loans also allow buyers to purchase luxury homes—those priced at $1 million or above, as well as second homes and personal investment properties.

Since these loans don’t conform to the limits, they can’t be sold to Fannie Mae or Freddie Mac, which means the bank takes on the risk for the loans. From 2008 to 2011 banks were reluctant to offer jumbo loans because they didn’t want to take the risk involved after the housing crisis. Now that the housing market is stabilizing, banks are offering jumbo loans again.

Jumbo mortgages often require a higher down payment of 20% or more for their loans. You typically need a 20% to 25% down payment on private jumbo loans, and mortgages over $1 million can require up to 30% for a down payment.

In order to qualify for a jumbo mortgage, you have to have a low debt-to-income ratio (DTI) that allows you to comfortably to pay the principal, interest, taxes, and insurance each month. The DTI compares your monthly debt obligations to your pre-tax income.  As a rule, the monthly mortgage payment on a jumbo loan should not exceed 43% of your pre-tax income. You will also need to present proof of income and document two years of income history when applying for a jumbo loan.

Lenders will want to see that you have enough money saved to cover housing expenses in case of an emergency. They will typically require 6 to 9 months of cash available to cover the monthly principal, interest, taxes, and insurance payment, also known as PITI reserves.

A good credit score is also needed to qualify for a jumbo mortgage. Required scores vary according to the lender, but you should expect to have a score of at least 700.

If you put less than 20% down on a home, your lender will likely require you to pay Private Mortgage Insurance or PMI. This is to protect the lender against default.  PMI benefits first-time buyers because it allows them to buy a home without putting down a large down payment.  Starting April 1, 2013, for FHA loans if you put down less than 10%, you will have to pay that premium for the life of the loan. If you put down more than 10%, it can be eliminated after 11 years.

Use our Mortgage Calculator at the top of this page  to figure out what your monthly payments would be.

The first step in getting a mortgage is to get your finances in order and figure out what you can afford. You want to be able to buy a home you can afford in good times and in bad. Remember you don’t have to buy a home that will cost as much as what you qualify for. On average, couples spend about 28%-33% of their income on housing, but you may want to spend less.

The second thing to do when you shop for a loan is to hire a mortgage broker, especially if your credit is less than perfect. Mortgage brokers are usually paid by the lender. They can determine how much you can afford, offer credit counseling, and recommend the best options for your needs. The broker does all the legwork for you so you don’t have to call every lender in your area.

One of the most important factors in getting a mortgage is your credit score. Lenders look at several factors when considering you for a mortgage and your history of repaying debts has a big impact on what your monthly mortgage payments will be. When your credit score is high you will be eligible for lower interest rates. You can get a free copy of your credit report by going to 

Once you know what you can afford and what type of loan you’ll get, you can search listings below for a home.

Questions about buying a home in Massachusetts or New Hampshire?

Call me: 978-660-1097  or Email at kevin@cormier.com