All About the VA Loan for First Time Homebuyers in DC

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First-time homebuyers made up 31% of those making home purchases in 2020. In a hot housing market, that means many US citizens were making the American dream come true. 

Buying a home is not an easy process, but can be especially challenging during a competitive housing market. Not everyone can make that dream a reality without some help.

In return for your service, the Department of Veterans Affairs offers some assistance to those who are serving or have served in the military. 

Read on to learn more about the VA loan and how it could help you be a first-time homebuyer.

What Is a VA Loan?

A VA loan is a type of mortgage a first-time homebuyer can secure if they have a military affiliation. The VA loan applicant must be active military, a veteran, or a qualified spouse. 

The mortgage can be used to:

  • Purchase a home
  • Purchase a condo if the building is VA-approved 
  • Build a home
  • Buy and improve a home
  • Make energy-efficiency improvements to a home you already own
  • Purchase a lot and/or a manufactured home
  • Refinance an existing loan

The VA loan is not given to you by the Department of Veterans Affairs. Instead, the loan is guaranteed by VA to the lender making it easier for the lender to offer the mortgage. 

How Do VA Loans Work for Residential Real Estate?

Since Veterans Affairs doesn’t actually give the loan, you need to find a lender who is willing to give a VA loan. Private lenders each have their own mortgage loan criteria, so it will vary from lender to lender and it’s important for you to shop around. 

The VA does encourage any lender that participates to help the Veteran secure a loan. The government will secure a portion of the loan. 

You should first go to the VA and fill out paperwork. This paperwork will be how you show the private lenders that you qualify for a VA loan. The VA will identify your entitlement, which is the amount they’re willing to guarantee. 

VA Loan Eligibility

Before you go to a lender, it’s necessary to check your eligibility for the VA loan. Veterans Affairs does have requirements you must meet before they will issue the entitlement you need to get approved by your lender. 

These requirements are:

  • You are on active military duty currently.
  • You are a veteran who’s been honorably discharged.
  • You are a veteran who’s met their minimum service requirements. 
  • You served 90 consecutive active days (at least) during wartime
  • Served at least 181 consecutive days of active service during peacetime
  • Served for more than six years in the National Guard or Selective Reserve

You may qualify for a VA loan if your spouse died in the line of duty.

VA Loan

How Is a VA Loan Different Than a Traditional Mortgage?

While you still go to a traditional lender to get your VA mortgage, this type of mortgage is different from a traditional mortgage. Let’s take a closer look at VA home loan benefits and how this type of loan is a little different.

Down Payments

One of the nicest features of a VA loan is that they often don’t require a down payment. Often if you meet the criteria for a VA loan, you aren’t likely to need a down payment either. 

One exception is if you are paying more for a home than what it appraises for. In some situations, the lender may also require a small down payment. 

Credit Scores

For many potential homebuyers, worrying about their credit score is a big part of the home buying process. 

The VA doesn’t have any minimum credit score requirements to get a VA loan. Having said that, most lenders do have minimum credit score requirements. 

Like a traditional mortgage, the better your credit score, the better the terms you’re likely to get for your mortgage. 

Insurance Requirements

When you seek a traditional mortgage and don’t put at least a 20% down payment, the lender will require you to get private mortgage insurance or PMI. This provides an insurance guarantee to the lender since there’s a limited down payment. 

When you seek a VA loan, you won’t have to pay PMI insurance, which can be big savings for you. Your lender won’t need PMI since the VA guarantees the loan.

Funding Fee

One thing to know about the VA loan is the funding fee that’s required by the VA. This is paid to Veterans Affairs as a processing fee. The rate you pay can be wrapped into the mortgage, but then you’ll pay interest on the amount for the life of the loan, greatly increasing what you pay.

The amount you pay is based on the type of loan you secure. Most people pay a 2.3% funding fee. But the funding fee can range between 0.5% to 3.6%.

Closing Costs

One consideration for all homebuyers is the amount of money you’ll need for closing costs. The VA does limit the amount a homebuyer can be charged for closing costs. 

Most VA loans pay around 3% in closing costs. 

Debt-to-Income Ratio Requirements

One consideration for lenders is the amount of debt you have including your mortgage. This is called the debt-to-income ratio. The VA does not have debt-to-income ratio limits, however, you will need to prove you have the funds to pay the mortgage. 

In most cases, the VA won’t want you to have a debt-to-income ratio higher than 41%.

Occupancy Requirements

The VA does require you to live in the home you buy with the VA loan. It should be your primary residence, not a vacation home or an investment property. 

First Time Homebuyers Using a VA Home Loan

The VA loan program helps many first-time homebuyers fulfill the American dream of homeownership. Seek information from the VA about your eligibility and get your entitlement for your lender. 

If you’re ready to find your perfect first home, we can help. Contact us today to begin your home search.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

You'll also find a month-over-month operating statement:

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Responses will show up in the conversation ticket:

  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Each conversation will be logged in its entirety:

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

View a snapshot of income and expenses on your dashboard:

See every transaction in real-time on your ledger:

Statements and forms will be posted to your documents library:

View a suite of real-time financial reports:

See a running list of all bills, and drill down for more detail:

Under Bill Details, you'll find dates/descriptions/amounts and more:

You can also communicate with your Account Manager through the portal:

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.