2025 VA Home Loan Insights: What Veterans Need to Know

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December 19, 2024
Timothy Chase
Mortgage Tips

2025 VA Loan Requirements: Home Loan Facts Veterans Need to Know

Summary: If you’re a veteran, active-duty or a surviving spouse looking to buy or refinance a home in Colorado Springs, a VA loan is your best bet. This is the ultimate guide to VA loans—from qualification and benefits to the local Colorado Springs real estate market, appraisals, 719 Lending and planning for the future. No word limit here so get ready for the most comprehensive resource you’ll find on this topic.

Why a VA Loan in Colorado Springs?

A Military Town: Colorado Springs is home to some of the largest military installations in the country, Fort Carson, Peterson Space Force Base (formerly Peterson AFB), Schriever Space Force Base, Cheyenne Mountain Space Force Station and the U.S. Air Force Academy. With a large population of active and former military, it’s no wonder VA loans are the backbone of the local housing market. The city’s economy and culture are built around this community so VA financing is readily available and well understood.

Natural Beauty and Quality of Life: Located at the foot of the Rocky Mountains, Colorado Springs has the perfect combination of scenic views, outdoor recreation, stable neighborhoods and a sense of community. Buyers can find everything from single family homes to modern condos to townhomes to rural properties. Veterans and service members often choose to live here for the great schools, mild climate, numerous healthcare options and endless activities year round.

Stable and Appreciating Market: The Colorado Springs real estate market is generally stable and appreciates in value so it’s a great place to use a VA home loan. A VA loan allows you to tap into that stability without a large down payment so you can maintain liquidity while you build equity in a dynamic market. While VA loans don’t require a minimum down payment, certain market conditions may require one to make an offer stronger.

VA Loan Benefit

The VA loan program, administered by the U.S. Department of Veterans Affairs, was created to honor and support those who served. Its purpose is to provide affordable and accessible home financing to veterans, active-duty, certain National Guard and Reserve members and surviving spouses. VA loan eligibility is based on specific criteria including length of service and eligibility for surviving spouses with exceptions for others to qualify even if they don’t meet standard requirements. By design VA loans eliminate many of the barriers that prevent people from becoming homeowners.

VA Loan Benefits:

No Down Payment Required: Unlike conventional loans that require at least 5% down (or 3% in some programs) or FHA loans at 3.5%, VA loans allow qualified borrowers to finance 100% of the purchase price. This is big in a competitive market like Colorado Springs where saving for a large down payment can take years.
No Private Mortgage Insurance (PMI): Conventional loans without 20% down require PMI which adds hundreds to your monthly payment. VA loans require no ongoing mortgage insurance.
Flexible Credit Requirements: While individual lenders can set their own credit score requirements, VA loans are more lenient. Even if you’ve had past financial setbacks (lower credit or bankruptcy) VA financing may still be available to you.
Lower Interest Rates: VA loans have lower average interest rates than conventional loans which means big long term savings over the life of the loan.
No Prepayment Penalties: You can pay off your VA loan early without penalty so you have flexibility if you need to move, refinance or pay down your principal more aggressively.

What About the VA Funding Fee? The VA Funding Fee is a one time charge to keep the loan program viable. It varies based on your service category, down payment (if any) and if it’s your first or subsequent use of the benefit. Many borrowers roll this fee into their loan to minimize upfront costs. Surviving spouses and veterans with a service connected disability are often exempt from the VA Funding Fee so this benefit is even more valuable.

(For more info visit the U.S. Department of Veterans Affairs website.)

What is a VA Loan?

A VA loan is a special mortgage program guaranteed by the U.S. Department of Veterans Affairs (VA) to help eligible veterans, active-duty and certain National Guard and Reserve members and surviving spouses buy, build or improve a home. One of the best features of VA loans is no down payment required which can be a big hurdle to homeownership. VA loans also have lower interest rates and no private mortgage insurance (PMI) so it’s a cost effective option for many borrowers.

The VA’s guarantee of a portion of the loan amount gives lenders the comfort to offer better terms. This guarantee means if the borrower defaults the VA will cover a portion of the loss so the risk is reduced for the lender. So veterans can get lower interest rates and more lenient credit requirements. VA loans can be used to purchase a primary residence or refinance an existing loan so there’s flexibility and benefits for those who have served.

Eligibility and Qualification Criteria: Minimum Credit Score

Basic Eligibility:

Length of Service: You must meet certain active duty requirements. For veterans this is often 90 days of wartime service or 181 days of peacetime service.
Current Service Members: Active duty personnel become eligible after 90 days of continuous service.
National Guard and Reserve Members: Generally eligible after 6 years of service unless called to active duty sooner.
Surviving Spouses: Certain surviving spouses of service members who have died on active duty can use the VA loan benefit.

To get eligible you’ll need a Certificate of Eligibility (COE) which can be obtained through the VA’s eBenefits portal or with help from a trusted lender like 719 Lending.

Credit and Income Guidelines: The VA doesn’t have a minimum credit score but most lenders require a 620 FICO score or higher. But if your score is lower don’t give up. Lenders who specialize in VA loans may consider other factors like stable employment, sufficient residual income or a history of on-time rent payments. The VA also looks at your debt-to-income (DTI) ratio and residual income to make sure you can afford your mortgage and other living expenses. VA loan limits affect the amount you can borrow with no down payment and these limits vary by county.

Occupancy Requirements: VA loans are for primary residences. You must intend to live in the property as your main home. However if you get Permanent Change of Station (PCS) orders or other service related relocations talk to your lender about how to handle these situations. VA loan limits determine the maximum amount the VA will guarantee but borrowers with full entitlement can borrow beyond those limits.

VA Loan Eligibility

VA loan eligibility is a crucial aspect of the VA loan process. To be eligible for a VA loan, you must meet specific requirements set by the Department of Veterans Affairs. These requirements include being an active-duty military personnel, veteran, or surviving spouse. The minimum service requirements vary depending on the type of service and the era in which you served. For instance, veterans typically need 90 days of wartime service or 181 days of peacetime service, while National Guard and Reserve members generally need six years of service unless called to active duty sooner.

A valid Certificate of Eligibility (COE) is essential to prove your eligibility for a VA loan. You can obtain a COE through the VA’s eBenefits portal or with the help of a trusted lender like 719 Lending. However, it’s important to note that VA loan eligibility is not solely determined by the VA. Lenders also have their own requirements, which may include a minimum credit score, debt-to-income ratio, and income documentation. Meeting both the VA’s and the lender’s criteria is necessary to secure a VA loan.

VA Loan Qualifications

VA loan qualifications refer to the lender’s requirements for approving a VA loan. While the VA does not set a minimum credit score, lenders typically require a minimum mid-score of 580-620 for 100% financing. This means that even if you meet the VA’s eligibility criteria, you must also satisfy the lender’s standards to qualify for a VA loan.

Lenders consider several factors when evaluating a borrower’s qualifications. Credit score is a significant element, with most lenders requiring a minimum mid-score of 580-620. Additionally, lenders look at credit depth, which involves a minimum two-year history of the applicant, including residence, income, assets, and credit. Income documentation is also crucial, with varying requirements depending on the type of income, such as W2, 1099, and part-time income.

Another critical factor is the debt-to-income ratio, which lenders use to ensure that borrowers can afford the loan payments. This ratio compares your monthly debt payments to your gross monthly income, helping lenders assess your financial stability. It’s essential to note that VA loan qualifications may vary depending on the lender and the borrower’s individual circumstances. Borrowers should work closely with their lender to ensure they meet the necessary qualifications for a VA loan.

Colorado Springs Housing Market

Military Friendly Neighborhoods:

Briargate: Top rated schools, family friendly amenities and close to shopping and dining.
Powers Corridor: Affordable homes, quick commute to Peterson SFB and Schriever SFB and lots of retail options.
Northgate and Flying Horse: Slightly more upscale with new construction homes, golf courses and mountain views, close to the U.S. Air Force Academy.
Fountain and Security-Widefield: South of Colorado Springs these communities have shorter commutes to Fort Carson, affordable housing and small town feel.

Market Tips: The Colorado Springs market can be competitive with well priced homes going fast. To win:

Get preapproved for a VA loan before you start looking.
Work with a real estate agent who knows VA transactions and the local market.
Be flexible with closing and negotiations.
Make strong, confident offers with a local lender behind you.

VA Appraisal and Minimum Property Requirements (MPRs)

What is the VA Appraisal: A VA appraisal is required and serves two purposes:

Property Value: Ensure the property is worth at least the purchase price.
Minimum Property Requirements (MPRs): Verify the property meets basic standards for safety, soundness and sanitation.

The county loan limit can impact the appraisal as it determines the maximum amount you can borrow with no down payment.

Key MPRs are:

Safe and functional mechanical systems.
Adequate heating (and cooling in certain climates) to maintain a livable environment.
Sufficient roofing with no major defects.
Access to clean water and a safe sewage system.
No major structural issues like severe foundation cracks.
No immediate safety hazards like exposed wiring.

If the VA appraiser finds repairs, you can negotiate with the seller to do those repairs. Many are minor and can be fixed easily. Having an agent and lender who knows VA guidelines makes this process much smoother.

(For more on property requirements go to the HUD website or the Consumer Financial Protection Bureau (CFPB) for general homebuying tips.)

How to Apply for a VA Loan

Applying for a VA loan is a multi step process but with the right guidance it’s a pretty straightforward process. Here’s a step by step guide to help you through the process:

Check Your Eligibility: Start by checking the VA’s eligibility requirements to see if you qualify for a VA loan. This typically involves meeting service requirements.
Get a Certificate of Eligibility (COE): The COE is the most important document to prove you’re eligible for a VA loan. You can apply for a COE through the VA’s eBenefits portal or with the help of a lender.
Find a Lender: Look for a lender who knows VA loans. A knowledgeable lender can help guide you through the process.
Get Preapproved: The lender will pull your credit and income to see how much you can borrow. Preapproval gives you a clear idea of your budget and makes you a more attractive buyer.
Find a Home: Now that you’re preapproved, you can start looking. Focus on properties that meet your needs and your budget.
Make an Offer: When you find a home you like, make an offer. Your agent can help you negotiate the terms.
Apply for the Loan: Once your offer is accepted, your lender will walk you through the formal loan application process and help you gather and submit the documents.
Close the Loan: Once your loan is approved you’ll sign the final documents and close the loan. At this point you’ll pay any closing costs and get the keys to your new home.

By following these steps and having a lender who knows VA loans you can feel confident and comfortable through the process.

Working With a Trusted Local Expert: Why 719 Lending?

Not all lenders are the same and few know the Colorado Springs military market like 719 Lending. Here’s why:

VA Loan Knowledge: 719 Lending specializes in VA financing and stays current on all guidelines, local market conditions and lender overlays. So you get the most accurate and up to date information and a lending experience tailored to your service history and homebuying goals.
Local Market Savvy: Their team knows the neighborhoods, home values and negotiation tactics to give you an edge when making offers. They can recommend real estate agents who work with VA buyers and guide you to areas that fit your lifestyle and budget.
One on One Guidance: Every veteran’s financial situation and homebuying goals are unique. 719 Lending takes the time to understand your needs, explain each step in detail and patiently answer any questions or concerns.
Clarity and Frequency: Buying a home and getting a mortgage can be overwhelming. 719 Lending makes sure communication is clear, frequent and helpful so you never feel lost in the process.

Get Started: Check out our Home Loan Options to see what programs may work for you and contact a mortgage expert at 719 Lending. Whether you’re a first time homebuyer, upgrading as your family grows or just relocating to Colorado Springs they can help.

Refinance Options: VA Streamline and VA Cash-Out

VA Interest Rate Reduction Refinance Loan (IRRRL) or VA Streamline: If you already have a VA loan a Streamline refinance can lower your interest rate with minimal paperwork and cost. Often no appraisal or credit underwriting is required and you could save hundreds a month.

VA Cash-Out Refinance: If you have enough equity a Cash-Out refinance allows you to take out cash for home improvements, debt consolidation or other big expenses. You can even refinance non-VA loans into a VA loan and get better terms and eliminate mortgage insurance. VA loan limits are the same as the conforming loan limits set by the Federal Housing Finance Agency (FHFA) and borrowers should check the FHFA website for the most up to date information on limits.

When to Refinance:

If rates are lower now than when you bought your home.
If you want to shorten your loan term (e.g. from 30 years to 15 years).
If you need cash for home repairs or energy efficient upgrades.

VA Energy Efficient Mortgages (EEMs)

Energy Efficient Mortgages allow VA borrowers to finance up to $6,000 in qualified energy efficient improvements into the loan. This includes things like better insulation, solar heating and cooling systems or smart thermostats. In a place like Colorado Springs where the temperature can swing 50 degrees in a day making your home more energy efficient can save you money long term.

VA Loan Myths and Misconceptions

Myth 1: VA Loans Take Forever to Close Reality: A well prepared loan file and an experienced lender can close VA loans just as fast as other loan types. Much of the “red tape” is gone thanks to modern technology and streamlined VA processes.

Myth 2: You Can Only Use Your VA Benefit Once Reality: You can reuse your VA benefit multiple times. After paying off an existing VA loan or selling the home you can have your entitlement restored to purchase another property. You may even be able to have two VA loans at the same time if you meet the eligibility criteria, a great advantage if you’re not ready to sell a previous property.

Myth 3: VA Appraisals Are Too Tough Reality: While VA appraisals have standards to make sure the home is safe and livable, these are generally reasonable requirements that most homes meet or can be addressed through minor repairs. It’s to protect you not restrict you.

Myth 4: Surviving Spouses Can’t Use VA Loans Reality: Certain surviving spouses of veterans who died in service or due to a service related disability can use the VA loan benefit. Check the eligibility guidelines or ask a knowledgeable lender like 719 Lending.

More Tips for a Smooth VA Loan Process

Improve Your Credit (If Possible): If you have time before buying work on improving your credit by paying down debt, correcting errors on your credit reports and making all payments on time. Even a small credit score improvement can get you better rates and terms.
Save for Closing Costs and Reserves: Although VA loans don’t require a down payment, having some savings for closing costs, optional improvements or unexpected repairs will give you peace of mind.
Be Realistic About Your Budget: Just because you qualify for a certain loan amount doesn’t mean you should borrow the maximum. Consider your lifestyle, future goals and potential changes in income. Owning a home should add security and comfort to your life not become a financial burden.
Think About the Future: Are you planning to stay in Colorado Springs long term? Will you PCS in a few years? If you’re moving soon consider how easy it would be to rent out the property or sell it quickly. VA loans are assumable under certain conditions which can sometimes be a selling point if you list the home later.

FAQs

Q: Can I use a VA loan for a condo in Colorado Springs? A: Yes, if the condo development is VA approved. Your lender can help determine if a particular condo meets VA requirements.

Q: Do I have to pay closing costs? A: Yes, there are closing costs but the seller can pay some or all of them. Also VA limits some fees and you can roll some costs into the loan. Negotiations and lender assistance will minimize out of pocket expenses.

Q: How does the VA Funding Fee work? A: The VA Funding Fee is a one time charge that helps keep the VA loan program low cost. First time users with zero down typically pay 2.15% (regular military) or 2.4% (Reserves and National Guard) but rates vary. You can roll the fee into the loan and may be exempt if you receive VA disability compensation or are a surviving spouse.

Q: How long does it take to get a Certificate of Eligibility (COE)? A: In most cases lenders can get your COE online in a matter of minutes. If additional documentation is required it may take a few days.

Q: Can I refinance a non-VA loan into a VA loan? A: Yes, through a VA Cash-Out Refinance you can refinance a conventional, FHA or USDA loan into a VA loan, potentially lower your rate, eliminate mortgage insurance and get cash back if you have enough equity.

What is the VA Loan Process?

The VA loan process takes 30-60 days depending on many factors. Here’s an overview of the process:

Pre-approval: The first step is to get pre-approved. Your lender will review your credit report and income to determine how much you can borrow. Pre-approval will give you a clear budget and make you a more attractive buyer.
Application: Once you’ve found a home and made an offer you’ll submit a formal loan application. This involves providing detailed financial information and supporting documents.
Processing: The lender will review your application and order an appraisal of the property to make sure it meets VA standards and is worth the purchase price.
Underwriting: The underwriter will review the appraisal and all submitted documents to make a final decision on the loan. This step ensures all VA loan requirements are met.
Closing: If your loan is approved you’ll move to the closing stage. Here you’ll sign the final loan documents, pay closing costs and complete the purchase.
Funding: After closing the lender will disburse the loan funds and you’ll be the new owner of your home.

While the VA loan process may vary slightly from lender to lender and loan to loan, working with a experienced VA lender will help make the process from application to closing as smooth as possible.

In a Nutshell

A VA loan isn’t just a mortgage—it’s a way to honor your service and build a stable life in Colorado Springs. From zero down to zero PMI the benefits get you in the Colorado Springs housing market with an advantage. Whether you’re buying your first Colorado Springs home, upgrading as your family grows or just taking advantage of the area’s stability and amenities a VA loan will give you savings, flexibility and peace of mind.

A local lender like 719 Lending can’t be beat. They know the VA’s requirements and the Colorado Springs market so you’ll get personalized guidance, competitive rates and a hassle free path to homeownership.

Ready to get started? Check out our Home Loan Options at 719 Lending and talk to a mortgage professional who gets you as a veteran or service member in Colorado Springs. Make the most of your earned benefits and live the dream in one of the best cities in the country for military families.