Credit requirements vary by lender, but borrowers should expect to have a mortgage credit score of 620 or higher to get jumbo loan financing from the VA. If you choose to pay off your mortgage in a short period of time, with a 10- or 15-year mortgage, these terms usually have a lower interest rate and overall cost. However, short-term loans have higher monthly payments. Meanwhile, a traditional 30-year loan may have lower monthly installments, but the overall cost and interest rate will be higher because the bank is taking more risks.
As a general rule, the VA recommends a debt-to-income ratio of at most 41%, including your mortgage. However, lenders set their own maximum DTI on VA loans and may be willing to accept a higher DTI in exchange for a higher interest rate. They may also have some guidelines in terms of credit ratings that they are willing to accept. Borrowers who have a lower entitlement than the total are subject to compliant loan limits in their county.
The VA guarantees 25% of the county's loan limit for those with remaining entitlement, as long as they purchase within the conforming loan limit for their county. However, if borrowers with a lower entitlement than the total apply for a loan above the county's loan limit, they must provide a down payment. Pre-approval letters are generally valid for 30 to 60 days and include information about the type of loan, purchase price, qualified interest rate, and the amount of the loan you would get. When purchasing a mortgage, multiple credit inquiries within a 14-45 day period will be reported as a single firm credit check on your credit report.
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