What Is an Arizona VA Loan?
The Department of Veterans Affairs (VA) administers VA home loans for veterans, active service members, and eligible surviving spouses. The VA guarantees the loan, meaning that if the borrower defaults, the government will pay the lender back for part of the remaining balance.
VA loans are an excellent option for those with less-than-perfect credit, as they have lower eligibility guidelines and do not require a down payment.
How Do VA Loans Work in Arizona?
Getting an Arizona VA purchase loan requires that you prove your eligibility, complete an application, and have the house appraised. Here’s what you can expect when you apply.
- Securing a Certificate of Eligibility (COE): Active-duty service members and veterans must prove that they have qualifying military service. VA eligibility depends on the length of your service and the terms of your discharge. You can apply for this on the VA website.
- Checking Your VA Entitlement: If this is your first time using the Arizona VA home loan program, then you will have a full benefit, which means there is no limit to your loan amount. However, if you have an existing VA loan, you have already used part of your VA home loan benefit and may have a loan limit. You can also check this on the Veterans Affairs website.
- Meeting VA Eligibility Standards: In addition to checking whether you have housing benefits, you must also ensure you meet all the program requirements, such as the debt-to-income ratio and credit score.
- Underwriting: We will double-check your eligibility and approve the loan amount.
- Closing Day: The seller will sign over the title to you, and you will pay your closing costs and down payment if you choose to provide one.
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Get a quoteKey VA Loan Benefits in Arizona
VA home loans offer significant advantages over other mortgage programs, which include:
- No down payment requirement
- No ongoing mortgage insurance
- Flexible credit requirements
- Lower rates
Another significant advantage is that those with full entitlement do not have any loan limit, while those with an existing loan can benefit from the standard VA loan limit. Given that high-priced areas like Maricopa County can cost around $487,500, veterans can afford the home of their dreams without a high credit score.
Arizona VA Loan Eligibility Requirements
Like other mortgage products, you must meet certain requirements for VA home loans. These include the following.
- Certificate of Eligibility: Provided by the VA, the COE shows that you have a VA entitlement and how much you can borrow.
- Credit Score: You can have a score as low as 500 for a VA loan.
- Debt-to-Income Ratio: Lenders are flexible with DTI for VA loans, as it depends on residual income. A 43% DTI is generally considered good for loan approval.
- VA Benefit Letter: If you want to take advantage of Arizona’s property tax exemptions for disabled service members, you will need this.
Arizona VA Loan Limits
If you have a full entitlement, then you do not have any loan limit. As long as you can afford the property, you can purchase it.
Those who have already taken out a VA mortgage will have a reduced entitlement. You can borrow up to $806,500 in Arizona, although your actual amount may be lower, and you may be required to provide a down payment. In some other areas, the limit is as high as $1,209,750.
For example, let’s say that you would like to purchase a home in Pima County, but you already have a VA loan for $450,000. You can borrow up to $806,500. However, you may be asked to provide a down payment because your debt-to-income ratio will be higher.
VA Loan Entitlement in Arizona
Entitlement means how much you can borrow based on the VA limits. If you have full entitlement, there is no limit to how much you can borrow, but if you have an existing VA mortgage or defaulted on an old loan, then you will be subject to the $806,500 loan limit.
While the VA program itself does not require down payments, a lender may ask you for one, particularly if you have an existing mortgage or a poor credit score.
It’s possible to replenish your entitlement by paying off your previous loan. For example, let’s assume you had a $400,000 mortgage through the VA that you paid off. Now you intend to sell that property and buy a new one. As soon as your mortgage is closed, you have full entitlement again and can borrow as much as necessary for your property.
Mortgage Rates for VA loans in Arizona
The VA program offers competitive interest rates comparable to those of conventional loans. As of now, a 30-year fixed-rate mortgage has a rate of around 5.990% with 6.436% APR.
If you’re ready to purchase, you can get a free quote to explore your options or apply to see how much you can afford.
Types of VA Mortgage Programs in Arizona
Service members can benefit from the VA’s full complement of mortgage programs, which cover both new purchases and existing mortgages.
- VA Purchase Loan: Whether you’re buying for the first time or have recently closed out your old mortgage, purchase VA home loans allow you to buy the property of your dreams.
- VA Cash-Out Refinance: Similar to a conventional refinance, this VA home loan allows you to leverage your equity for home improvements, debt consolidation, or other financing needs. You will need to keep at least 20% equity in the property after refinancing.
- VA Interest Rate Reduction Refinance Loan (IRRRL): Also known as a VA streamline refinance loan, this option lets you benefit from lower interest rates without a new appraisal or income check.
How to Get a VA Loan in Arizona?
The helpful team at Arnaiz Mortgage will guide you through each step of the VA home loan process. You can expect speedy service and thorough explanations for each element of your mortgage journey.
- Pre-Qualification: At this step, you determine how much you can borrow. Even if you have full entitlement, lenders still expect to see a debt-to-income ratio and credit score that shows you’re able to cover your expenses. We’ll help you collect the evidence you’ll need, such as bank statements, credit reports, employment records, and tax returns.
- COE: This document from the VA shows that you are eligible for the loan and how much entitlement you have remaining. You must show evidence of your service or, if you are a surviving spouse, that your loved one died due to their service.
- House Hunting: This is the best part of getting a mortgage: finding your dream home! Along with a realtor, you will find the perfect Arizona property for your needs, whether that’s a quiet bungalow in Prescott or a bustling townhome near Phoenix.
- Appraisal: The VA appraisal process ensures that the home meets the VA’s standards for safety and habitability. It also determines the home’s market value. If there are significant issues with the property or if the appraisal comes in low, you may have to provide additional documentation.
- Underwriting: During underwriting, the lender thoroughly reviews the information provided. They also verify that the home’s title is accurate, that the seller has the right to transfer the property, and that there are no zoning or property line issues.
- Closing: If underwriting runs smoothly, then it’s time to close. Here, you will officially take over the title from the seller. You will also pay a VA funding fee, which is in lieu of mortgage insurance, as well as closing fees and any down payment.
Why Choose Arnaiz Mortgage for Your VA Loan in Arizona?
Arnaiz Mortgage is proud to help Arizona veterans and service members achieve their dream of homeownership. Our local experts are highly familiar with Arizona-specific down payment assistance programs, lending regulations, underwriting guidelines, and more.
Our goal is to ensure that you have a smooth mortgage experience, which is why we take the time to explain every step of the process to you, guiding you from COE to closing day. We pride ourselves on speedy approvals and veteran-first service.
