VA loans for new construction homes?

[usctrojancpa]

Just found out today that the VA funding fee is WAIVED for Veterans receiving disability compensation at any rating, which will definitely be the case once my husband retires. With that knowledge, we will not make a move to buy until after he is out. That is a good chunk of change that we will save. Plus, my husband pointed out that the military will pay for our last move after retirement so might as well stick them with that cost as well.

I am very appreciative of all the info provided so far.

That's definitely good news, I didn't know the funding fee could be waived. 

 

[Dr. CA Real Estate]

Yep fee waived started 2020. I think the bigger boon is the limitation removal.

 

[sleepy5136]

Just wanted to clarify a few things for the people "concerned" about finances.

First of all, I'm a she. I'm the spouse of an 0-5 ranked military officer with 22 years of active duty service. He will be retiring in about 2.5 years. Income is solid and guaranteed now and beyond. He cannot be laid off or lose his job.. He is guaranteed a military retirement at this point.

His retirement pension will begin immediately upon separation and he expects to receive significant VA disability pay as well. Our NET on just those things after he separates will be around $7-9k per month, with annual COL raises. He will have a second career as well, and expects to make around $150k at that job. I don't work now but likely will in the future once my kids are done with school.

Our plan is to use his pension for housing expenses and we are willing and able to use up to $6k per month towards that, which will be right around 40% of our gross monthly pay. As mentioned we have no other debt.

We have other investments in addition to the cash we have in savings. Those are long term investments though. Don't worry about us "losing" money on our cash savings. It's at least in a high yield account at this point. At our current savings rate, we will have around $120k when we are ready to buy. We'd like to keep $75k on hand as liquid savings going forward (to hedge against job loss at that second job) so we will have about $45k to use towards the home purchase. It would be foolish to throw all our cash towards a down payment.

RIGHT NOW, our income is around $175K, of which $48k is tax free income. We pay $3300 monthly in rent. We pocket $4000 after monthly expenses and investments. We can certainly spend more on our housing payment, even at this point. We live pretty frugally overall and don't see a situation where we are suddenly spending more per month than we do now.

We plan to stay in Irvine forever. We will buy a home with the assumption that we will never move again. We will be around 45 when we finally buy so are not concerned with the house as an investment, and don't really care about having equity in it early on.

We can certainly keep renting long term. We have a sweet deal going with our landlord, but the fact is the house we are in won't work for us long term. We have 2 disabled teens who will likely live with us well into adulthood and we need more space for that eventuality. They can't share a twin sized bunkbed forever. A larger rental would easily be $4500 month. Why not spend a bit more and just buy at that point?

If people are willing to buy Gamestop at $300+ per share, I will not think its crazy to put your all your cash towards a down payment .

With your comment on your finances, of course it makes sense to buy. The only issue I initially saw when you posted initially is you didn't mention your finances and it came off as you didn't have much funding to buy a home. With that out of the way, as the others mentioned, maximize your ROI.

 

[sleepy5136]

Do builders accept VA loans for purchases of new construction properties? Is this a viable option in Irvine? We qualify for a VA loan but know how difficult it can be to buy a resale home using this option. We don't have much for a downpayment (we could squeeze out 3% if absolutely necessary but would prefer zero down). Our lack of down payment $$$ is the largest obstacle we have. We prefer to keep our savings liquid for emergencies because we have no debt and want to keep it that way.

Now that VA has removed loan limits for people who have their full loan eligibility, we might actually have a chance to become homeowners.

I'm not sure if I read that right, but if you want to buy a home with 0% down payment, I would say you are not ready to buy a home. 3% down payment is also on the low side and you will be paying a big mortgage each month along with PMI. If you do not have sufficient money to buy a house, I wouldn't recommend doing so. I'm not sure how many months of emergency fund you have currently, but normally people recommend 6 months. I would personally recommend having enough for one year in the event covid-21 happens.

Not sure that you know how VA loans work.  VA loans offer veterans 0% down loans with no PMI at around the same interest rate as conforming loans. So why wouldn't someone borrow with a 100% VA loan for a home with such a low interest rate?  It's a well-deserved benefit for our veterans.

Its an additional funding fee. And from the looks of his initial post, he is putting the would be down payment $ to the bank. Which in a 0 interest rate is the worse. We also don?t know if his emergency funding is sufficient for a rainy day fund when you have a mortgage. 6 months of emergency funding for rent is not the same as 6 months of emergency fund for a mortgage

If it is their first VA loan, the funding fee for a 0% loan would be 2.15% vs. 1.25% if they put down 10% or more so that's a fairly easy decision to put as little down with as loan rates are.  If they want, they can bump of the interest rate by 1/8% and get enough lender credit to almost take care of the small delta in the fee.  VA and MD loans are great options for the folks who are eligible for them.

All of your points of valid only assuming ones finances are stable. You may think that its implied, but lots of people in America are living paycheck to paycheck, even home owners.

 

[brergnat]

Yep fee waived started 2020. I think the bigger boon is the limitation removal.

Both are great. But the removal of the limit is what will make it possible for us to buy, finally, in Irvine.

 

[brergnat]

Just found out today that the VA funding fee is WAIVED for Veterans receiving disability compensation at any rating, which will definitely be the case once my husband retires. With that knowledge, we will not make a move to buy until after he is out. That is a good chunk of change that we will save. Plus, my husband pointed out that the military will pay for our last move after retirement so might as well stick them with that cost as well.

I am very appreciative of all the info provided so far.

So is that this year or later?

Retirement is scheduled for either Sept 1, 2022 or 2023. Have to see how some other things shake out over the next 4-5 months.

I started down this path once I found out the VA loan limits had gone away, and our second 3 year lease on this place is up this July. We have been debating what direction to go and how long of a lease we should sign upon renewal time. Our landlord charges us WELL under market rate for this place (she hasn't raised it more than $50 since 2015) and she has said we can stay at the same rent if we renew.

Now that I know the funding fee can be waived, we will wait until after retirement and likely sign another 1 year lease and see where we are next summer.