Profile picture for LacySmith4

Husband and I are trying to get a VA loan. How much should we have in savings?

We applied through USAA but we were declined because we didn't have anything in our savings account. Since then we have paid off one of our vehicles and added a small loan and have saved up about $1500. Our scores were low to mid 700s. How much would be a good guesstimation on how much to have in our savings before we apply again. We only have two months left to get prequalified before we have to sign another lease. 
  • August 07 2013 - Avon
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Answers (11)

Profile picture for GMerino

Lacy,

Thank you for your question, some banks more than others are very strict with their guidelines when it comes to an underwriting approval.  Not having sufficient assets in the bank is not reason to deny with most lenders.  But you never know.  Your scores are great, you do not seem like you have that much debt and you have 1500 in assets. 

The reason you may have been declined is due to not having sufficient funds in the bank for closing cost, which would have included an appraisal fee that would have to pay out of pocket.  Now that you have assets you should be fine, is my guess.

You always want to have a savings no matter what when it comes to buying a home, that does not go to say that you are not responsible and could not make the payment.  Savings for a rainy day!  If you could get a gift from a family member just to have in your bank account that would be great.

Closing costs could be paid for with lender credits.  Use your VA benefits it is 100% financing depending on the eligibility benefits for VA.  There is no reason to switch to an FHA loan because you would end up paying Mortgage Insurance Premium making the payment even higher

  • August 07 2013
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Hello Lacy - I would strongly suggest working very closely with your lender. I would follow their instructions. They have all of your information and should be able to guide you. There may be factors involved that are not in your question. As a back up, I would save 3.5% down so that just in case you cannot get the VA loan maybe the lender could switch you over to an FHA loan and you would already have your funds ready to go. You would need to ask the seller to pay 3% towards your closing costs. I hope that helps!
  • August 07 2013
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Hello Lacy,

I have heard not only through clients but also from other reviews that USAA does not have the best reputation for their mortgage department. I will ALWAYS recommend them on their insurance policies because I usually find they can't be beat.

With that said, I have never heard of a VA loan being denied due to lack of savings. The reality is the VA allows for financing of 100% of the purchase price and also allows for the seller to contribute up to 6% of the purchase price towards your closing cost essentially giving you the ability to purchase a home without a single dime out of your pocket.

I'd be happy to speak to you further about your situation. There may be something else they were either not telling you or something you may not have understood. Feel free to contact me.
  • August 07 2013
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Switch lenders!  I would recommend the Shanley team they are homes for heroes lenders which will save you money not only that but they will hook you up with a homes for heroes agent that will give you 25% of the commission back towards closing costs and prepaids. Homes for heroes is an amazing program that saves veterans, police, fire, teachers, nurses, doctors, active military and emt's on buying and selling.
  • August 07 2013
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Profile picture for PaulMcCausland
You should be fine with the cash that you have. You earned the VA eligibility, you should use it.
  • August 08 2013
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Hi Lacy,
Check and see if with your current situation you can meet these two conditions which might be your requirement for qualifying for the USAA Va loan:
  1. Your gross (pre-taxes) monthly salary must be more than 28% of the sum of the monthly mortgage and monthly tax payments.
  2. Your gross (pre-taxes) monthly salary must be more than 35% of the sum of the monthly mortgage, monthly tax and other monthly debt payments.
  • August 08 2013
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Geofrey's second paragraph is likely the reason for declination.  Lender and/or seller can contribute to closing cost and that would typically be spelled out in a Loan Application.  Having at least $1,500 in reserve account is important, rather than using it up for closing cost. You might be better served by sitting down with a local lender and going over the pre approval process.
Eugenia - you might want to go back and delete your reply as it is not accurate. VA has one ratio and it is typically 41-43%.
  • August 08 2013
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Lacy,

With your information provided, I don't see any reason you shouldn't be able to use your VA eligibility. I would recommend contacting a different lender. 

Give me a call if you like some more information on your VA loan. 


Thanks!
  • August 08 2013
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Eugenia - you might want to go back and delete your reply as it is not accurat
===========================
Not to mention that:   "Your gross (pre-taxes) monthly salary must be more than 35% of the sum of the monthly mortgage, monthly tax and other monthly debt payments" works out to a debt to income ratio of 285%; I can't say I've been able to get a VA loan through at that DTI. 


As a back up, I would save 3.5% down so that just in case you cannot get the VA loan maybe the lender could switch you over to an FHA loan 
===========================
Then by all means do so; however don't recommend to other people follow such ill advised "advice". 



  • August 08 2013
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I suggest you talk to a local lender about a VA loan.  I encourage my buyers to sit down face-to-face with the loan officer who can help them with the paperwork and coach them every step of the way.
Congratulations on a good credit score:)  The VA loan is a wonderful loan and a benefit you should use.  I'm sure a local lender can explain how you can qualify.  
  • August 09 2013
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That is very surprising what you are describing.  At the most I could see them wanting 2 months of your total mortgage payment in the bank after the closing.  But you should check with another lender as another option as you may have just found a lender that is much more strict than the actual guidelines require.

I hope it works out for you but I am sure it will.
  • August 11 2013
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