Installment Loan Terms and Eligibility Guidelines 2020
installment loans help thousands of military service members and veterans buy homes each year. Here is an overview of who can apply and the conditions to qualify for a installment loan.
installment loan eligibility
Backed by the US Department of Veterans Affairs, installment loans are a benefit for active and veteran military service members and some surviving spouses. You are eligible to apply for a installment loan if:
You are on active duty and have served 90 consecutive days.
You are a veteran who meets the length of service requirements, which are typically 90 days in wartime and 181 days in peacetime.
You have completed 90 days of active service or six credible years in the Selected Reserve or National Guard.
You are the surviving spouse of a veteran who died while in service or from a service-related disability and you have not remarried. Or you remarried after the age of 57 or on December 16, 2003. Spouses of military personnel missing in action or prisoners of war are also eligible.
You may still be eligible even if you do not meet the length of service requirements in some cases, such as being fired for a service-related disability. Check with the AV for details.
You may not be eligible if you have received an “other than honorable”, misconduct, or dishonorable discharge, although you can ask the AV to upgrade your exit status.
The list is here.
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How to Apply for a installment Loan
You can apply for a installment loan from a bank, mortgage company, or credit union that offers them. The process is similar to applying for other types of mortgages – you provide employment, income, and other financial information, and the lender decides if you qualify.
One unique item you will need is a installment eligibility certificate. The Certificate of Eligibility is a document from the Department of Veterans Affairs that shows that you meet the service requirements for a installment loan. You can request the document through the installment, or ask a installment loan lender to obtain the certificate of eligibility for you.
installment Loan Terms: Credit, Debt, and Income
Lenders will look at your credit, debt, and income to decide if you qualify and to determine the interest rates they will offer.
The installment does not set a minimum credit score to qualify for a loan. But installment loan lender may set their own minimum standards for FICO credit scores, which typically fall between the low and mid-600s.
Lenders will also review your credit report, especially your timely payment history.
DTI for installment loan
AV prefers a debt to income ratio, or DTI, by not more than 41%. But borrowers with higher DTI ratios may be approved if they have enough “residual income,” another factor lenders take into account when reviewing mortgage applications. Residual income is the money left over to cover basic living costs, such as food and clothing, after pay loan back each friday, shelter, and other obligations.
Down payment terms on the installment loan
In most cases, installment loans do not require a minimum down payment. However, if the home’s purchase price is more than its appraised value, you may need to make up at least part of the difference.
And if you are subject to installment loan limits and the price of the home exceeds the county loan limit, then a down payment will be required.
If you are buying in a competitive market where home buyers outnumber sellers of homes, you may need a down payment just to get your foot in the door. An auction situation will require a down payment for the seller and as part of your down payment it shows that you are a serious buyer.
The advantage of depositing money is that it will likely reduce the installment financing fees.
installment Loan Terms
The home you want to buy must meet the minimum installment ownership requirements. The standards ensure that housing financed by installment loans is safe, structurally sound and sanitary.
Once you are under contract to purchase a home, the lender will hire a licensed installment appraiser to estimate the home’s market value and ensure it meets minimum property requirements. An installment Assessment may also be necessary when refinancing a installment loan.
Eligibility for other installment loans and grants
The installment also offers housing grants for veterans and service members with service-related disabilities and home loans for Native Americans.
Housing grants for people with disabilities
This program offers three grants to help veterans and military personnel with a service-related disability purchase or modify a home to meet their needs. The specially adapted housing subsidy is for a house you own or will buy. The special housing adaptation grant can be for a house that you or a family member owns or will buy. The Temporary Residence Adjustment Grant is intended for a family member’s home where you live temporarily. You must have an eligible service-related disability to be eligible for any of the grants.
You can apply online through the Benefits Portal on the installment website or download installment Form 26-4555 and send it to the nearest regional loan center.
Native American direct loan
Helping Native Americans buy, build, improve, or refinance homes on federal trust land is the goal of the Native American Veterans Direct Loan Program. The program is available to members of certain Native American tribes and their spouses, as well as Native Alaskan societies and residents of Pacific Island territories.
To get started, confirm that your home community is participating in the NADL program, apply for a installment Certificate of Eligibility, and contact your state’s installment regional lending center.