VA loans are mortgages provided by private lenders and backed by the Department of Veterans Affairs. Thanks to the VA’s Home Loan Guaranty, these loans are safer for the lenders, allowing borrowers more favorable terms and unique benefits.
In Arkansas, eligible borrowers include many of the state’s 178,000 veterans, active-duty service members, National Guard members, and eligible surviving spouses.
Surviving spouses of Arkansan veterans who were in a same-sex marriage are just as eligible for VA loans as opposite-sex spouses since Obergefell v. Hodges in 2015, and the VA is required to treat them equally.
VA Home Loan Benefit
VA mortgage programs come with special benefits that are not available with conventional loans. They were designed specifically for veterans and military families, so they don’t have a down payment requirement, there is no mortgage insurance, and lenders cannot charge you prepayment penalties. In addition, VA loans have less stringent requirements.
No Down Payment Required
Most homebuyers put off the decision to purchase a home as they believe they don’t have enough for a down payment, especially in hot markets. Typically, Arkansan residents pay around $11,603 or 11.90% upfront, which isn’t a small sum to save with the rising living costs.
Thanks to the Department of Veterans Affairs, borrowers can get VA loans without paying anything upfront.
No Private Mortgage Insurance Premiums
Arkansan borrowers who used conventional loans pay $365.50 on average, and those who used FHA loans pay $162.90 per month. However, people who get VA mortgages don’t pay mortgage insurance at all. This leaves you with more money to cover ongoing expenses or repay your mortgage loan sooner.
Competitive Interest Rates
VA loan rates are generally competitively low, enabling veterans and their families to buy homes on favorable terms. Given that the typical home in Arkansas costs $207,880, 3.3% more than last year, families can save the money for something other than mortgage interest.
Flexible Credit Requirements
If you want to get a VA loan, it’s worth knowing that the VA itself doesn’t set any minimum credit score or income requirements. Rather, the requirements vary by lender, and typically, lenders ask for a credit score of 620 and a debt-to-income ratio of 41%. However, we also work with some lenders who will go as low as 500 for a credit score. They are also flexible on your DTI, so it’s important to ask a professional company like Pride Lending if you qualify.
No Prepayment Penalties
You can pay off your VA loan as early as you’d like without any extra costs. While it may affect your mortgage interest tax deductions, paying off your loan early has other advantages, such as peace of mind and building home equity sooner.
Assistance for Struggling Borrowers
VA mortgage programs come with assistance options for eligible veterans who are struggling to meet their monthly payments. Available options include:
- Repayment plans – By working with your lender, you agree on a repayment plan to manage your debt.
- Special forbearance – This refers to a period of three to four months during which you suspend or decrease your monthly payment.
- Interest Rate Reduction Refinance Loans – IRRRLs are specifically designed to reduce monthly payments by altering your loan term or interest rate.
- The Veterans Affairs Servicing Purchase (VASP) program – In this program, the VA buys your loan from your lender, ensuring you can keep your home.
Eligibility Requirements for Arkansas VA Loans
In order to get a VA loan, veterans and their families must meet a number of requirements:
- Active-duty service members and veterans – Serving 90 continuous days in war or 181 days during peacetime, with any discharge except for dishonorable.
- National Guard or Reserve members – At least six years of service or at least 90 days of active-duty service, with 30 of those consecutive.
- Surviving spouses – Their spouse died on active duty or due to service-connected disability, and they haven’t remarried.
If you are an LGBTQ+ veteran who has served and was discharged during Don’t Ask, Don’t Tell, and you aren’t satisfied with your discharge status, you can apply for an upgrade.
Certificate of Eligibility (COE)
The Certificate of Eligibility (COE) is a crucial document that you need to:
- Prove you meet the eligibility requirements
- Submit your VA home loan application
- Determine your level of entitlement
You can get a COE in three ways:
- On the VA website – sign in to the VA portal and submit your request.
- Through your VA lender – Get it directly through your VA loan servicer.
- By mail – Complete the VA Form 26-1880 and mail it to your regional loan center.
VA Loan Limits and Funding Fees
In Arkansas, VA loan limits have been removed for most veterans, service members, and military families with full VA loan entitlement (no active VA loans). This means there is no maximum loan amount that they can take in the eyes of the VA.
However, the total loan amount still depends on your assets, income, financial health, and credit score, which is something you will determine with the lender.
Other eligible borrowers, or people with remaining entitlement, still qualify for a VA loan, but it depends on VA loan limits in their county and the entitlement they have used up to that moment.
A VA funding fee is a one-time fee that all borrowers must pay to alleviate the impact of VA loans on public funds.
VA funding fees for 2024 amount to:
- 2.15% for a down payment between 0% and 4.99% (for first-time VA loan users)
- 3.3% for a down payment between 0% and 4.99% (for all subsequent uses)
- 1.5% for a down payment between 5% and 9.9%
- 1.25% for a down payment of 10% or more
Some borrowers are exempt from paying funding fees:
- Veterans receiving or eligible for service-connected disability compensation
- Borrowers with pending pre-discharge claims
- Borrowers receiving Dependency and Indemnity Compensation
- Purple Heart recipients
Types of VA Loans in Arkansas
VA loans work similarly to conventional loans, with some differences. Here are the three main VA loan types available in Arkansas and what they’re used for.
VA Purchase Loan
A VA purchase loan allows eligible veterans, active-duty military, eligible surviving spouses, and their families to buy single-family homes, condos, or manufactured homes that must serve as their primary residence.
As it doesn’t require a down payment or private mortgage insurance, a VA home loan makes homeownership much more attainable to first-time homebuyers.
VA Streamline Refinance Loan
VA streamline refinance loans are created for people with existing VA mortgages who want to refinance their loans to improve their terms.
By getting a VA streamline refinance loan, you can reduce your monthly mortgage payments, get lower interest rates, switch to a fixed-rate VA loan, and opt for a shorter or a longer loan term.
VA Cash-Out Refinance Loan
A VA cash-out refinance loan lets you replace your existing mortgage loan with a new, larger loan and get the difference between the two in cash to fund education, medical expenses, repairs, or other costs.
Eligible mortgages are those that are currently VA as well as those that are conventional and FHA that will renaissance into a VA loan. We understand this can be a bit confusing, so please reach out to Pride Lending if you have any questions about eligibitly requirements.
The VA Loan Process
- Get your COE: The Certificate of Eligibility verifies a borrower’s ability to get a VA Loan. Pride Lending can help you obtain your COE, making the process seamless.
- Check Finances: Determining a budget is crucial to determining how much house you can afford. Examine how much money you have after necessities, such as utilities. An expert at Pride Lending can help you learn more about your debt-to-income ratio and finances.
- Choose a Lender: Work with a lender like Pride Lending, a VA loan specialist. Your lender must understand how VA loans work, can guide you through the requirements, and maximize your benefits.
- Shop for a House: Next, it’s time to find a house you’d like to purchase. Work with local real estate agents or check out online listings to find houses within your price range. Ensure your home meets your requirements, such as how many bedrooms it should have.
- Purchase Agreement: A purchase agreement is a legally binding contract between the buyer and seller. These contracts outline the terms of the sale to protect the buyer and seller. For example, a buyer may put a clause in the contract if the appraisal value is lower than expected. Many contracts include an Earnest Deposit Clause, which details how much the buyer will put down as a deposit and terms for refunding the deposit, such as if the buyer doesn’t make certain repairs.
- Inspection and VA Appraisal: An inspection is often recommended because it gives an in-depth look at the home’s condition. Buyers can negotiate a more favorable price if they have to spend significant money on repairs. A VA appraisal is required to obtain a VA loan. An independent VA appraiser will look at the property’s condition and ensure it meets the minimum property requirements to ensure veterans or their families don’t wind up with unsafe property.
- Complete Underwriting: Underwriting is the process lenders use to evaluate a borrower’s financial situation. You’ll need to submit proof of income, expenses, and assets. A lender will determine your debt-to-income ratio, look at your credit score, and evaluate your finances to determine your eligibility for a loan.
- Closing: Finally, you attend the closing and sign all necessary papers. The funds are sent to escrow, the loan closes, and you receive the keys to your new home!
Why Choose Pride Lending for Your Arkansas VA Loan?
Pride Lending is a certified LGBT business dedicated to providing veterans with a satisfying home-buying experience. We have years of experience finding the most suitable VA loans for our clients and treating them with the respect and commitment they deserve.
If you’re tired of the mortgage loan process and poor service, you can count on us to work in your best interest with accuracy and care.
Our application process is streamlined and straightforward, and our mortgage officers are always ready to help — you will never waste your time trying to figure out the next step.
Take The Next Step In Your Home Ownership Journey
VA loans come with unique benefits that veterans and military families rightfully deserve — no down payment requirements, no PMI, no prepayment penalties, and favorable loan terms.
Buy your dream home sooner than you think and provide a safe space for your family — contact us online or call us at 725-231-0192 today.
Take the next step and find the right VA home loan to settle down in Little Rock, Fort Smith, or anywhere else in Arkansas.
