Gift Money or Gift Funds for Down Payment

Gift Money for Down Payment

What You Need to Know…

What You Need to Know About Using Gift Money or Gift Funds for Down Payment

Gift funds for down payment on home purchase is allowed by both FHA and Fannie Mae and Freddie Mac, however, there are rules and regulations with regards to gift funds and each loan program has their own lending guidelines on gift funds. 

Many families help each other out, especially in Hawaii. Gifting money also helps with estate tax later.

A parent may give their children gift funds to purchase a home.  A grand parent may give their grandchild gift funds to be used towards the down payment of their home purchase. A couple may get gift funds as their wedding gift from family or close relatives where they can use that as a down payment for their home purchase.

Why Are Lenders So Uptight About Gift Funds?

Mortgage lenders want to make sure that the gift funds are actual gifts and not loans. If an applicant were to borrow part of the funds required to complete the transaction, that monthly expense would need to be accounted for in their debt-to-income ratio. Mortgage lenders want you successful in making your mortgage payments.

Gift funds do not need to be repaid, so there is no additional burden on the borrower. And it is the only type of financial assistance that doesn’t change the borrower’s capacity to borrow, it has historically been one of the most abused and cheated aspects in lending.

To combat such fraud, underwriting guidelines have been put in place to ensure that the gift fund is in deed a real gift!

Before you accept gift funds for down payment on a home purchase, check with your loan officer for instructions. 

You loan officer will tell you that gift funds for down payment needs to be sourced.  The donor of gift funds for down payment on your home purchase needs to complete a gift letter which states that the gift funds is not a loan and that the gift funds does not need to be paid back. 

The donor of the gift funds needs to provide 30 days of the donor’s bank statement showing that the gift funds was seasoned in the donor’s bank account for at least 30 days. The gift funds leaving the donor’s account needs to be reflected in the bank statement of the donor. 

The recipient of the gift funds needs to provide the copy of the check, the deposit slip, and a new bank transactional history print out that is signed, dated, and stamped by the bank teller reflecting the funds in the bank account of the recipient.

The Gift Letter must contain the following information:

The donor’s name, address and phone number
The donor’s relations to the homebuyer/recipient
The dollar amount of the gift for down payment
The date that the gift fund is transferred to the homebuyer
A written statement from the gift donor’s stating that the fund is a gift and NOT a loan that needs to be repaid.
The gift fund donor’s signature
The address of the property to be purchased.

Gift funds can only be given by a close family member.

The person giving the gift will need to:
§ Sign a Gift Letter that includes their complete contact information and amount of the gift.
§ Provide a copy of the check or financial instrument used to transfer the gift.
§ Provide proof that they themselves had the ability to give the gift (the money was in their account).

The gift recipient will need to provide proof those transferred funds were deposited in an account they hold.

How Much of the Down Payment Can be from a Gift?

That depends on the type of home loans.

For conventional home loans, if you putting 20% down payment or more, then the whole amount can be gifted.

However, if you’re putting less than 20% down, only part of the down payment can be from a gift fund, and the rest has to be from your own fund.

Gift funds for down payment is only allowed on owner-occupied primary and second residences. Gift funds are not allowed for investment property purchase.

What About FHA Loans and VA Loans?

Both FHA loans and VA loans allow 100% gift funds for down payment for home purchase. Both loans are for owner-occupant only.

If you are purchasing an investment property, gift funds cannot be used at all, period.

It is VERY important to note that if gift funds are provided early enough in the process, and those funds have remained in the borrowers own accounts for more than 60 days, no gift funds supporting documentation is required.

Gifts are not restricted to only money. Gifts can also be in the form of equity in a property. If parents wish to have their child purchase a property from them, the parents can gift a portion of the equity to be used as the child’s down payment.

What Else Do You Need to Know About Gift Money…

Gift Tax, sometimes confused with Inheritance or Estate Tax, is a tax on the transfer of cash, asset, property from one person to another while receiving nothing in return, in another word, as a gift.  

In most states, the tax applies whether the donor intends the transfer to be a gift or not.  

The Gift Tax and Estate Tax are closely related.  The IRS allows you to give up to $14,000 per year to any number of people without incurring any gift taxes.

If the gift exceeds $14,000 in a given year, the person who makes the gift, not the recipient, has to file a gift tax return and pay any tax owed. However, there is $5,430,000 lifetime exemption before you have to pay gift tax.

Any gift that exceeds the annual exemption of $14,000 reduces your estate tax lifetime exemption of $5,430,000.  For example, you give your son $114,000 in 2015.   $14,000 is exempted while you have to file a gift tax return and report that you used $100,000 of your $5,430,000 lifetime exemption.

Here’s the good news…

There is NO gift tax in Hawaii.  All Gift Tax are exempt in the State of Hawaii.

If the total estate asset (property, cash, etc.) is over $5,430,000, then it is subject to the Federal Estate Tax.

Stop Foreclosure Now Before It’s Too Late…

Stop Foreclosure Now

Foreclosure is a stressful and unpleasant experience, not to mention the impact it has on your credit score, your ability to obtain a mortgage and it may even affect your employment for the years to come. No one wants to have to go through the foreclosure process.

But life happens…job loss, divorce, unforeseen illness/disability, death in family, underemployed, business loss, etc.

No matter the situation that brought you to defaulting on your mortgage payment and facing potential foreclosure, we have the solution for you.

Related article: Protect Your Home with Life Insurance

The most important thing to remember is that you always have options.

We’ll help you understand your situation and what options are available and best for you.

What options are available to avoid or stop a foreclosure?

Option #1: Selling Your Home Quickly

This is the simplest option of all if you don’t own more than the home is worth. You can easily sell your home in the conventional way with a real estate agent, listing on the MLS.

Or you can sell your home to us without any agent’s commission, as we’re not real estate agent. We’ll buy your home in “as in” condition.

You’ll get your money quickly as this would be a cash transaction. A traditional home buyer with bank loan would need a minimum of 30 days to close on the transaction.

Option #2: Short Sale

A short sale is similar to option #1, except you owe more than your home is worth. For example, your mortgage balance is $500,000, but your home is now worth only $350,000.

This option is not as easy as the first because when you took out the mortgage initially the bank created a lien on your property.
You’ll need to get the bank’s approval to sell your home for less than what you owe because the bank is losing money.

Many banks would agree to such option because the short sale is a lot easier and less expensive than a full on judiciary foreclosure.

Related article: What is a Short Sale?

Option #3: Loan Modification

If your goal is to stay in your home, a loan modification is what you need. A loan modification can help you work with your bank to modify the loan term to help you stay in your home.

Check out MakingHomeAffordable.gov. Hurry, programs expiring December 31, 2016.

See…you still have three options to stop foreclosure.

Don’t delay…contact us now or fill out the form above.

I am a real estate investor and can buy your home in "as-is" condition as an investor (not as a real estate agent).

Therefore, you pay no commission or service fees to me at all.

What is a Home Equity Line of Credit or HELOC?

What is home equity line of credit or HELOC?

If you have used a credit card, you'll easily understand the concept of the home equity line of credit or HELOC. In simple term, a HELOC is a revolving credit, like the credit limit with your credit card. The difference is that a HELOC uses your home's equity as a collateral. Basically, it's a credit card secured with your home's equity.

And what is home equity?

What is Home Equity

Home equity is the difference between what your home market value and the total home mortgage you owed. For example, your home is now worth $1 million, and you have a home mortgage of $300,000. So in this case, your home equity is $700,000.

Most banks do not let you borrow 100% of your home market value. The most I've seen are 90% and 95%.

How much home equity line of credit can you qualify for?

The qualification is very similar to qualifying for a home loan. You still have to show proof of income, good credit score, appraisal, etc. The general rule to figure out how much you qualify for is 80% of your home equity.

We'll use the same example we used earlier. So your home is worth $1 million in the current market. 80% of that $1 million is $800,000. We then subtract your current outstanding mortgage of $300,000. Therefore, you qualify for up to $500,000 in HELOC, given you meet income and credit score requirements.

What Can You Use a HELOC for?

HELOC uses

You’ve probably hear many times radio or TV advertising HELOC to finance your dream vacation, wedding, dream car, dream wedding, etc.

You should see me roll my eyes when these advertising show up…these are the worst way use the money.

First of all, when you borrow money to buy things that do not return money, that’s bad debts. You’re digging a hole for yourself.

A better use of the HELOC is to pay of your bad debts, such as high interest credit card balance, car loans, college loans, etc.

Even though the bank generally does not want you to use the money for real estate investing (because they think any investing is risky), but that’s the way to go.

I purchased my first rental property with a HELOC from my primary residence. And my rental property is making money for me while I’m sleeping, and the equity is of course growing every day like a healthy child.

Some banks may allow you to refinance your existing home mortgage into a HELOC. This is a rare strategy that not many people know of.

You can technically use the HELOC to pay off your mortgage in 5-7 years . I’m serious, no kidding…

Many local banks and federal credit unions offer very enticing introductory rates.

Hawaii Foreclosure 101

Hawaii Foreclosure Process

What is a Foreclosure?

A foreclosure is a legal process by which a homeowner’s right to the property is terminated, usually due to default. It typically involves a forced sale of the property at public auction with the proceeds applied toward the mortgage debt.

In Hawaii, mortgage lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure.

In judicial foreclosure or “foreclosure by action”, the mortgage lender files the appropriate documents with the court to rule that the homeowner is in default.

The mortgage lender then delivers the notice of default to the homeowner, or publishes the notice if they have trouble contacting the homeowner.

The homeowner has 20 days to respond. If the homeowner does not respond in 20 days, the court would find the homeowner in default and the mortgage lender can proceed with scheduling the foreclosure sale.

However, the homeowner has 30 days after the notice of default to file a notice of appeal.

A commissioner is usually appointed to sell the property at the public auction, which are usually held at the court house steps. The commissioner publishes the notice of foreclosure sale in the local paper showing the auction dates and open house dates, if any.

Any party may bid at the auction and the winning bidder is required to pay 10 percent of the bid cash or cashier’s check.
Unfortunately, the highest bidder does not automatically get the property. Additional bidding may continue at a confirmation hearing. If the court find the price fair at the confirmation hearing, then the sale is confirmed.

Non-judicial foreclosure or “foreclosure by sale”, does not involve any court action.

The mortgage promissory note usually contain a provision called a “power of sale” clause, which allows the mortgage lender to foreclose on the property upon default to satisfy the unpaid mortgage loan.

In a non-judicial foreclosure, the mortgage lender’s attorney would publish a notice of foreclosure sale once a week for three (3) consecutive weeks in a local newspaper in the county the property is located.

The last publication cannot be less than fourteen (14) days before the sale.

The copy of notice must be posted on the property and mailed or delivered to the homeowner no less than 21 days prior to the foreclosure sale.

The foreclosed property is auctioned off to the highest bidder. The auction maybe rescheduled, which happens frequently. And the notices of sale must be re-sent and re-published.

The homeowner has up to the three (3) days prior to the foreclosure sale to save the default by paying the defaulted debt along with any costs and reasonable attorney’s fee.

Hawaii offers no right of redemption for homeowners once the sale of the property is confirmed. However, homeowners in Hawaii do have up to one (1) year to redeem a tax lien foreclosure.

After the foreclosure sale, a homeowner may still face deficiency judgement if the proceeds from the foreclosure is not enough to pay off the mortgage promissory note IN FULL, meaning the property was sold SHORT.

A foreclosing mortgage lender who completed a non-judicial foreclosure of residential property is prohibited from pursuing a deficiency judgement against the homeowner unless the debt is secured by other collateral.

Read Avoid Foreclosure at All Cost.

Invest in Short Sale?

Short Sale Timeline for Buyers

Read What is Short Sale?.

A short sale can be a good deal for a cash buyer or investor. And it can help the seller avoid having a full foreclosure on his or her credit record.

Because in a short sale, the proceeds from the home sale are less than the amount the seller needs to pay off the mortgage debt and the costs of selling, so for this deal to go through, everyone who is owed money must agree to take less -- or possibly no money at all. This is one reason why short sale can be a very complex transaction that move slowly and often falls through.It is a lengthy and paperwork-intensive transaction that may take up to a whole year to process.

If approved for short sale, the buyer or investor negotiates with the homeowner first, then seeks approval on the purchase from the bank. It is important to note that no short sale may occur without the lender’s approval.

Before you rush in, consider the following issues.

1. Know what you are getting into. Buying a short sale is not a do-it-yourself project. Find a real estate professional (even attorney), who understands the short sale process in your state. Having an experienced and knowledgeable real estate agent (or fellow investor) on your side who knows how short sales work will increase the chances of closing the deal without loosing your shirt. Even under the ideal circumstances, short sales can take a long time to close and may require extra effort on the part of the buyer.

2. Be wary of the condition of the property. If the seller is in financial distress, chances are the home may not be well-preserved. The seller also may be reluctant to reveal serious maintenance issues. Proceed carefully and get the property inspected by a knowledgeable person before you commit.

3. Make sure the deal can close. If you've decided to go for it, the first step is to determine the status of the short sale. Below are items that most lenders require from a short seller. If the seller is unable or unwilling to provide this information, the short sale won't close and any buyer is wasting his or her time.

A hardship letter. The seller must explain why he/she cannot keep up with making payments. The sadder the story, the better. A seller who is simply tired of struggling probably won't be approved, but a seller with cancer, no job and an empty bank account may. The most common acceptable reasons are divorce, bankruptcy, loss of job or some kind of emergency.

Proof of income and assets. It is in the best interest of the lender to recover funds from the home owner. If the lender discovers that the home owner has other assets, including retirement funds, they may prefer to liquidate these assets for payment on the mortgage, and denies the short sale. The proof of income and assets must include income tax and bank statements, going back at least two years. Sometimes sellers are unwilling to produce these documents because they conflict with information on the original loan application, which may have been fudged. If that's the case, this deal is unlikely to close.

Comparative market analysis. This document shows that the value of the property has declined, which essentially means the home owner has no equity in the property, and it won't sell anytime soon for the amount owed. The comparative market analysis should include a list of comparable properties on the market and a list of properties that have sold in the past six months or have been on the market in that time frame and are about to close. This analysis is very similar to the Broker Price Opinion, which is less formal but often more informative than a property appraisal. The prices should support the seller's contention that the property is worth no more than the short-sale price.

A list of liens. The home owner must be at least 3 months behind on the mortgage and has been served a lis pendens from the court indicating that the lender intends to foreclose on the property if they do not receive payment in the near future. There may be more than one lender or liens on the property, and all lien holders have to agree to take less -- or possibly no money at all..

If there are first and second mortgage liens, the question becomes: What's the plan to satisfy these lien holders? If there is a third mortgage lien, reaching any deal is very iffy.

Deal killers include child support liens, state tax liens and homeowners association liens. If they exist and there are no obvious solutions, walk away, Thompson says.

Because a short sale generally doesn't cover the whole amount owed or other liens, it can trigger mortgage insurance. If the property is covered by a mortgage insurance policy that doesn't have to pay off until the home has been in foreclosure for 150 days or some similar length of time, chances are the insurer will hold up the sale because it won't want to pay any earlier than necessary and hopes the foreclosure will just disappear. Often the mortgage insurer will simply go silent. Thompson says: No response, no approval.

4. Be realistic. Short sale is a waiting game. This is not your game, if you're in a hurry.
Part of the slow down in short sale is potential buyers’ lowball offers, which are ultimately rejected.

Another factor is the increasing number of government programs aimed at keeping people in their homes. According to the Mortgage Bankers Association, about 50 percent of defaults never go as far as foreclosure. So lenders see short sales as potentially the least attractive option and aren't willing to expedite them.

To avoid getting stuck in an extended process of negotiation, start by negotiating with the seller and the seller's agent that your offer will be the only one presented to the lender. If the lender isn't flooded with offers, it will be more motivated to move forward.

5. Have your cash ready. Once you have a deal, you should have your money ready, preferably cash. If you're getting a loan, you need bank approval in advance.

As with any deals like REOs, short sales, foreclosure, or auctions -- make sure you have money lined up ready to go. Cash is always the best financing option in all these deals.

Search Hawaii Hard Money Lenders.

Hawaii Private Money Lenders

Definition: A private money lender is a non-institutional (non-bank) individual or company that loans money, generally secured by a note and deed of trust, for the purpose of funding a real estate transaction. Private money lenders are generally considered more relationship-based than hard money lenders.

Hard money lending is the process of borrowing money from a professional private lender, with the bulk of the lending decision based on the hard asset being bought.

Private money lending is borrowing money from non-professional lender, where the bulk of lending decision is based on the relationship between the lender and borrower, but enhanced by the hard asset being bought.

Private lenders lend money out not as a living, but usually as an investment. The rate, fees and terms are usually less and much more negotiable than hard money lending.

Why Borrow from Private Money Lenders?

One of the biggest mistakes that new real estate investors make is that they spend an inordinate amount of time learning about finding and typing up deals but a small amount of time on how to raise equity capital from private money lenders. It’s just as important, if not more important, for real estate investors to understand the ins and outs of raising money as finding the deal.

Finding a deal is great but if you do not have earnest money to tie up a deal or funds to purchase it, then all that time and effort is for nothing. (Ankit Investing Life Rules: Work Smarter Not Harder). When you make an offer on a piece of property, it is expected, and usually required, that you place an earnest money deposit down with your offer. If you are currently living paycheck-to-paycheck, coming up with even a few hundred dollars can be a big hurdle in launching your real estate investment business, let alone thousands needed for a purchase. Hence if you work on raising capital from private money lenders while locking up deals then you will have a greater chance for investment success.

The first question that most investors come up is who should I approach to raise the equity capital? Lets try to answer that question

Why Would Someone do Private Lending?

1. Higher return than stock market, index fund;
2. Security – private lender holds first position liens on the property;
3. Passive investment.

How to Find Private Money Lending?

1. RealtyShares is a crowd funding platform for raising capitals for real estate from accredited investors .
2. Local real estate investors, especially older ones, as they don’t want to do much work anymore and just prefer more passive income.
3. Family and friends. This is how most people begin. I don’t advise asking all your families and friends. You need to approach this very carefully.

How to Get Your Private Lenders to say YES?

1. Find a deal
2. Connect with private lender
3. Build your brand
4. Build relationships
5. Ask
6. Do the math
7. Reduce risk
8. Present it right

Related article: Investor's Guide to Private Money Lending.

Fannie Mae HomePath Home Loan

The Fannie Mae HomePath Loans used to be one of the best loans out there, until Fannie Mae announced that the mortgage program was to be discontinued as of October 7, 2014.

Fannie Mae HomePath Loan is a mortgage program that allows a borrower to purchase a Fannie Mae-owned property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance.

The Fannie Mae HomePath mortgage requires a minimum down payment of 3% (versus 3.5% required for an FHA loan) and 10% down for investors or second-home buyers.

Anyone can apply for HomePath mortgage. You don’t have to be a first-time home buyer. Investors and seond-home buyers are allowed too. Remember these are foreclosed homes owned by Fannie Mae. Basically, these are the same a bank-owned or REO properties. Fannie Mae just want to get rid of them fast and get their cash back.

By providing their own mortgage, Fannie Mae made it easier for people to qualify for a mortgage and sell their properties faster.

Because Fannie Mae HomePath homes are technically foreclosures, many do need some TLC. Fannie Mae also offered the HomePath Renovation Loan in Hawaii for borrowers to purchase properties that require little to adequate renovations.

Both the purchase and renovation amount are wrapped into one single loan. The maximum loan amount for moderate renovation is up to $35,000 in repairs or up to 35% of the after rehab value.

Benefits of Honolulu Fannie Mae HomePath Mortgage

• Lower down payment with flexible mortgage terms. 3% down payment is required and the source of funding can come from a gift, a grant, or nonprofit organization; 10% down payment for second homes or investment properties.

• No mortgage insurance is required in most cases and HomePath Loans allow flexible mortgage terms, including; fixed-rate, ARMs, or the interest only payment feature.

• You can use Fannie Mae HomePath loans to purchase a primary residence, investment property, or a second home.

• No appraisal required. Fannie Mae usually allows up to 97% financing available for primary residences and up to 90% for Second Homes and Investment Properties.

• You can buy 1-4 unit properties. And options are available for borrowers who have more than 10 financed properties. Great choice for real estate investors.

• Both the purchase loan and renovation loan are wrapped into one easy loan.

I think Fannie Mae HomePath Loan is a perfect loan available given all the benefits listed above. Unfortunately, it is no longer available.

However, you can still buy discounted HomePath Homes in Honolulu. Click here for available HomePath Homes.

3.5% Down FHA Loan

The Federal Housing Administration (FHA) is an agency under the Department of Housing and Urban Development (HUD). The FHA itself does not offer loans, but it insures mortgages against losses to give lenders or banks more confidence in making high risk loans. FHA loans are designed to help prospective homeowners who can't qualify for conventional mortgages.

Why use FHA Home Loan?

FHA home loan allows low down payment of 3.5%. The remainder of the 96.5% can be finance with a FHA loan provider for a 15 year or 30 year fixed rate mortgage.

FHA home loans generally offer more favorable interest rates than conventional loans. However, interest rates are determined by factors, such as property types, the credit score of borrowers, and loan to value ratio.

FHA will insure loans on residential properties such as single family, approved condominiums, and multifamily (1-4 units). Which means you can buy a 2-, 3- or 4-unit property, live in one and rent out the other units for income to help with your mortgage.

FHA allows co-signers (related parties) and down payment gifts. There are no income limits or restrictions.

FHA has a loan that allows you to buy a home, fix it up, and include all the costs in one loan. Or, if you own a home that you want to re-model or repair, you can refinance what you owe and add the cost of repairs - all in one loan.

FHA Loan Limits for the State of Hawaii by County

What else do you need to know about a FHA home loan?

There are two types of insurance that borrowers should be aware of if their down payment is less than 20% of the purchase price.

On a 30 year term loan, there is an upfront mortgage Insurance premium of 1% of the loan amount. This premium can be financed and be added to as part of the loan.

The second insurance is the monthly mortgage insurance premium (MIP). The current MIP rate is 1.10% to 1.15%, which is an addition to the monthly payments, making monthly payment more costly.

FHA Home Loan Eligibility

Contrary to popular belief, FHA loan is not only for first-time home buyers.

FHA guidelines require you to establish occupancy within 60 days of buying the home. Failure to meet the residency requirements, you could end up being prosecuted for fraud or FHA could accelerate your loan to make you pay off the remaining loan balance in full.

FHA guidelines allow a maximum debt-to-income ratio of 43 percent and a minimum credit score of 580 is required for FHA loan approval. FHA loans may also be approved with lower credit scores if other compensating factors exist.

Related article: Repair and Improve Your Credit Score

Is an FHA Home Loan for you?

To find out if an FHA home loan works best for your situation, you should shop around for other mortgage products on the market today with an experienced mortgage provider. Other mortgage alternatives, besides conventional mortgages, include
USDA (U. S. Department of Agriculture Rural Development) home loans or VA (Veterans Administration) home loans.

Zero Down VA Loan

Purchase Your Next Home with Zero Down Payment with a VA loan

If you are a US military veteran, or if you are currently serving our country and have been on active duty for a minimum of 90 days, you could qualify for a VA Loan. With the special benefits, a VA Loan provides almost the best choices of financing available to eligible borrowers.

The Veterans Administration does not actually lend money. They work with mortgage lenders to guarantee the homes loans in the event that the VA homeowner forecloses, the VA will reimburse the mortgage lender all or portion of the mortgage owned.
This guarantee enables lenders to provide loans to borrowers who may not qualify for other conventional loans.

VA LOANS ADVANTAGES

The number one reasons to finance your homes with a VA loan is “zero down payment”. With a VA loan, you do not need to come up with a down payment. You can finance up to 100% of your home purchase with a VA loan. That means you save many years to save up money as down payment.

VA loans generally have lower interest rates than most conventional loans, which means affordable monthly payments.
With a conventional mortgage, a borrower who does not put at least 20% down payment, is required to pay VA loans do not require to pay private mortgage insurance, or PMI. So with a VA loan, this translates into monthly savings of $200 - $400 a month.

With a VA loan, eligible veterans can easily save up to $2,000 in closing cost as many closing fees are waived.

VA LOAN LIMITS

The maximum VA loan amount (with no down payment) is determined by average home prices in each county. In Hawaii, the maximum amount with no down payment is $721,050 for Oahu, $713,000 for Kauai, $657,800 for Maui, Lanai and Molokai, and $625,500 for Big Island.

You may also qualify for a VA loan of up to $1.5 million if you are willing to make a small down payment.

ELIGIBILITY

If you enlisted or entered service before September 7th, 1980 you may be eligible for the VA Loan program if you served at least 90 days in wartime or 181 days in peacetime.

If you enlisted after Septem 7th, 1980 or entered service as an officer after October 16th 1981, you would have to serve at least 24 consecutive months (or the full period called to active duty not less than 90 days in peacetime or 181 days in wartime) to qualify for a VA loan.

Reservists in Army National Guard, Army Reserve, Air National Guard, Coast Guard Reserve, Navy Reserve, Marine Corps Reserve and Air Force Reserve are also eligible. At least 6 years of service, can be non-consecutive, are required.

OCCUPANCY REQUIREMENTS

Unlike conventional loans, VA loans are only for primary residences. The Veterans should be prepared to move into the new home within 60 days after the loan closing.

Download the VA Loan Guide below for details:

Zero Down USDA Home Loan

For home buyers today, there are two mortgage programs that offer 100% financing.

The first is the VA loan from the Department of Veterans Affairs. It's available mostly to active duty military personnel and veterans nationwide.

The other is the U.S. Department of Agriculture's Rural Development Single Family Housing Loan Guarantee Program. The USDA home loan is sometimes called a "Rural Housing Loan" or a "Section 502" loan.

Similar to FHA loan, USDA does not generate the loan. It insures mortgage lenders against loss 100%. The program is meant to drive homeownership in rural and underdeveloped areas.