CalVet Home LoansUpdated: November 10, 2022
If you’re looking to buy a home in California, whether you’re an active-duty military member or a veteran who received an honorable discharge, you will need a top-quality loan to help you finance your home.
Many veterans often opt for a VA Home Loan, but California has a special program specifically designed by the state. There are certain requirements that need to be met in California, and there are some key differences between a CalVet home loan compared to the typical VA home loan program, but the benefits of getting one are considered far better by some, and you can use it for different applications compared to the typical home loan.
What Are CalVet Home Loans?
California has a special home loan program in terms of providing a home loan for veterans called CalVet loans. This home loan has the ability to offer veterans less than typical interest rates, and in most cases, unlike most regular home loans from a lender or financial institution, they usually don’t require a down payment. Some home loans can only be used for purchasing homes, and some for land (to build your home or to use as farm land), and many home loans won’t cover mobile homes. If you qualify for a CalVet Home Loan, you can receive money for any of these property types, and even use the loan to remodel your current home or build a new one.
What is Required for a CalVet Loan?
There are certain criteria that need to be met when it comes to getting a home loan in any case, and the CalVet program is no different in that there are requirements that need to be met to ensure that you’re eligible. Many people often wonder if they’re eligible to receive one, but the truth is, it’s not hard to meet these requirements in most cases.
First, a veteran or active-duty member may or may not qualify depending on how long they have served. Those who joined and were in active duty less than 90 days during wartime (equivalent to 180 days during peacetime) post-training will be eligible. There are requirements for disabled veterans with any veteran loan, and there may be exceptions. Some people try to get home loans when they are in AIT (Active Individual Training), but in many cases, this is still considered training time and does not count towards active duty military status. Get with a CalVet representative, as there may be exceptions to be discussed.
If you are a veteran, in order to qualify for the CalVet program, you must receive an honorable discharge. Any military member who is discharged from service receives a DD-214 form and this must be shown to have an honorable discharge. Sometimes, you may be able to qualify if you have “Under Honorable Terms” listed on your discharge papers as well, but they must be brought in as part of your application.
FICO scores are an important factor. Don’t believe just because you fix your credit that you’ll immediately be able to qualify for a home loan. Many lenders require you to have a score of 620 and above. If you have bad credit, you may need to fix your credit score and keep it at that for a few months before you’re eligible for a CalVet loan.
For a CalVet home loan, you’ll also need to have a relatively low debt-to-income (DTI) ratio. This means that all your monthly debts will be divided by your gross monthly income, and if it is anywhere from 35-50% of your total income (or less than 35 of course), you’ll be considered.
Benefits of a CalVet Loan
CalVet loans are exceptional loans designed to help veterans get on their feet. California knows sometimes soldiers need help after they’re discharged in order to get their lives back on track. When you get a CalVet loan, you get some pretty amazing benefits compared to other home loans. These are:
- Lower interest than other lenders’ normal rates.
- The origination fee is lower than anywhere else and doesn’t have any lender fees attached.
- You get real approved underwriter services with your loan to help you get approved.
- CalVet loans have insurance options attached to them with low deductibles.
- You aren’t limited to the use of the loan (farmland, and as mentioned earlier, even mobile homes are covered).
- If you get a Revenue Bond-funded loan, you can have even lower interest rates.
- Once you get a CalVet loan paid off, your CalVet and VA loan eligibility resets (making you eligible for another loan).
How CalVet Loans Differ from VA Home Loans
CalVet loans differ from a typical VA home loan. While it may not be a problem to some, other people may be affected and concerned with a CalVet home loan. With all of the benefits you get though, this is not really a big issue. One of the main differences between the two types of loans is CalVet loans are funded by the state of California, while VA loans are of course funded by the federal government. Aside from this, the loan itself actually differs, as the state will act as the middle-man in the loan process, and they buy the property for you, then allow you to pay on it like a regular bank would, thus having ownership of the said property until the loan is paid off. A VA Home Loan actually lends you the money, and gives you ownership of the property, but puts a lien on it. Either of these loans are still subject to foreclosure if you default on them.
No matter what type of loan you choose, if you’re in the state of California, you do have options. The CalVet Home Loan is an excellent option for veterans seeking to get the most out of their loan and many find it easier to purchase a home through this process rather than going through other lending processes.