Arizona is an amazing place to raise a family: it has a low cost of living and plentiful outdoor activities to keep your kids active and engaged with the natural world. With its stunning scenery and plentiful museums, your kids will grow up bright, inquisitive, eco-conscious, and culturally aware should you choose to move to the Grand Canyon State.
If you or your spouse is an active military member or veteran, the process becomes simpler thanks to Arizona VA loans, which are home loans guaranteed by the Department of Veterans Affairs in order to help military members settle down and raise a family in the land that they have sacrificed so much for.
However, there are some specific stipulations you need to know about regarding VA loans before you make the big move to Tucson, Phoenix, or charming small towns like Chandler and Bullhead City.
There Are Specific Requirements in Regard to Your Military Service
Not every veteran is eligible for a VA loan: the requirements are based on length of service and discharge status. In general, you must have served a full 24 months of continuous active duty, but this is reduced if you were called to active duty during peacetime: then you must only have served 181 days.
This is further reduced to 90 days if you served in an active war zone. However, you can still achieve a VA loan if you were discharged due to hardship, government convenience, or medical conditions but served less than 90 days.
Those in the National Guard or National Reserves must have served at least six years. Surviving spouses can only qualify if their loved one died in the line of duty or passed away due to a service-related disability.
For veterans, they must have an honorable discharge, but it can be due to hardship, government convenience, medical conditions, disability in the line or service, or early out as mentioned before. You may not qualify if you have a dishonorable discharge.
Before you apply for an Arizona VA Loan, you need to complete a Certificate of Eligibility (COE); fortunately, you can fill this out online at the Veterans Affairs website.
You Also Need to Prove Creditworthiness
Now, don’t worry – VA loans have much lower thresholds for creditworthiness than other Arizona mortgage programs, as your loan is guaranteed by the government. This means that lenders are more willing to work with veterans who have lower credit scores or a higher debt-to-income ratio than they would for non-service members.
Generally, you will need a credit score of at least 580 to qualify for a VA loan, similar to the thresholds for FHA loans. You should also strive to have the lowest debt-to-income (DTI) ratio possible: there are no hard and fast rules, but generally, lenders want a DTI of 41% or lower.
VA Loans Don’t Require a Down Payment or Mortgage Insurance
Now that we’ve discussed eligibility from a military and credit perspective, we can consider the many benefits of a VA loan.
One of the best perks of a VA loan is that it doesn’t require a down payment, unlike FA, USDA, or conventional loans. This makes it much simpler to purchase a home if you don’t have much in savings but still have the income necessary to cover a mortgage. However, you can still make a down payment if you so choose, which will be credited toward your loan amount.
You also won’t need private mortgage insurance (PMI), as the loan is guaranteed by the government. This will save you greatly in costs per month – especially important if you’re saving up for your child’s college fund or simply would like more money to spoil your kids each month.
You’ll Enjoy Lower Closing Costs and Interest Rates
You’ll pay less upfront and also over the life of your loan, thanks to lower closing costs and interest rates. While closing costs are generally 3% to 6% of the overall loan amount, yours may be significantly lower as a thanks for your service.
You’ll also enjoy lower interest rates: as of July 2023, the average interest rate for a 30-year VA mortgage is 6.57%, which is far lower than the current 30-year rate of 7.23% for a conventional loan.
Head Off to Sunny Arizona With Your Family in Tow
Arizona has so much to offer growing military families, from beautiful recreation to thriving, multicultural communities. If you or your spouse has a history of honorable military service, don’t let low savings or a low credit score stop you: you can purchase a home with no down payment and a lower credit score by applying for a VA loan.
By working with a reputable lender, you can find competitive rates that will let you raise your little ones under the wide-open skies of the Grand Canyon State, preparing them for a bright and vibrant future.