If you’re a military veteran or active-duty military, and you want to buy a home. You may be looking into a VA mortgage loan and wonder if it’s a good choice for you. For many active military and retired military, VA loans can be the way to go.
Let’s take a closer look at these excellent loans below.
VA Loans Are Backed by The US Government
VA house loans are guaranteed by the US Department of Veteran Affairs and are issued by private mortgage lenders such as a credit union mortgage company or bank. A VA home loan can make it easier to buy a home because down payments aren’t required, and credit scores are typically lower to qualify.
The VA loan guarantee means that the US government will pay back the lender for most of the costs of a loan if you default. This ensures that the risk for the VA lender is less, so this makes it possible for them to offer lower interest rates and more flexible lending criteria to VA loan applicants.
People who are eligible for VA mortgage loans should look at them closely because you can rarely get as good of a deal in any other government program.
VA Loan Eligibility
You may be eligible for a VA loan if you’re on active duty in the military or a veteran who meets the required length of service standards. You also may qualify if you are a surviving partner, husband, or wife of a service member who passed away while on active duty.
Also, you need to meet the mortgage lender’s requirements for income and credit. There isn’t a minimum credit score to qualify for a VA loan; the mortgage lenders can set their own standards. Some lenders may have a 620 or 640 credit score, but if your score is too low, keep shopping.
The lender also will look at your debts and income to determine if you will be able to repay the mortgage. The home that you want to buy also needs to meet minimum standards set by the VA, as well as local building codes. Learn more from the VA.
VA Loan Limit
One factor to consider with VA loans is the VA loan limit. This is the maximum amount you’re allowed to borrow from a mortgage lender without needing to come up with a down payment. As of 2021, the VA loan limit for most borrowers was $548,250 for the typical US county. But it can be as high as $822,375 in higher-cost areas such as parts of California.
VA Loan Advantages
If you’re a veteran, you should consider trying to get a VA loan because there are many advantages.
The first advantage is no mortgage insurance or down-payment is required. Most other loan types including FHA loans require mortgage insurance, and you usually need to make at least a 3% or 5% down payment. VA loans are one of the few loans left in the US that you don’t need to make a down payment. The VA guarantees zero-down home loans for veterans and active military borrowers.
It could be beneficial for you to come up with a down payment, so you have a lower mortgage rate, but you don’t have to for a VA loan.
The next advantage is interest rates for VA loans are often lower than market rates. This is because VA loans are seen as a significant benefit for veterans. So, the VA sets the mortgage rates well below market rates and they’re even better than FHA mortgage rates.
Closing costs for VA loans are also lower than most other loans. The origination fee for the mortgage lender can be no more than 1% of the loan amount. Lenders also aren’t allowed to charge some of the closing costs that they do for FHA and conventional loans.
VA Loan Considerations
Of course, any loan has advantages and disadvantages. One of the considerations for VA loans is the VA loan funding fee. You don’t have to pay mortgage insurance, but you do have to pay an upfront funding fee ranging from 1.4% to 3.6% of the loan. It depends on whether it’s your first VA loan and if you made a down payment.
Also, you can only use a VA loan for your primary residence; you cannot use your VA entitlement to buy an investment property or a second home.
Also, not every home is going to be eligible for a VA mortgage loan. The appraiser from VA will look at the home and determine if it meets its minimum standards. Not every fixer-upper is going to meet the VA loan requirements.
One thing that many people don’t know is that getting a VA loan isn’t something you only can do once. You’re only allowed to use your VA entitlement one at a time, but you can get more than one loan in your life.
For example, if you get a VA mortgage and then you sell the house, you can get another VA loan. If you’re interested in applying for a VA loan.
How To Get A VA Home Loan Today
There are a few things you need to do to get a VA loan. First, you need to get your certificate of eligibility from the military service branch in which you served. The VA lender can get this document for you if you like, and you only need to have it at some point before you close.
You also need to shop around for the right lender. While VA loan standards are usually consistent, some lenders can offer better terms than others. It always pays to look around. You can find lenders who offer the same program, but the interest rate or DTI could be different.
The bottom line is you can do well as an active military member or a retired veteran if you choose VA loans. The closing costs down payment and interest rates are lower than other types of loans, and it could really be a good deal for you.
VA Related News
Are VA loans taking too long to process? – New York Times