VA Loan Information, Tips and ResourcesLearn about VA loans with these information, tips and resources.
VA loans first became available in 1944 through the Servicemen’s Readjustment Act, or what is more commonly known as the GI Bill of Rights that was signed by President Franklin D. Roosevelt. This new law was intended to provide veterans and their families affordable housing and mortgage assistance with a federally guaranteed loan programs with good mortgage rates, and little to no down payment requirements.
This law allows the VA to guarantee loans made by lenders to qualified veterans for the purchase or refinance of a home. The federal guaranty by the government protects the lender against loss if for some reason you fail to repay the loan. These guarantees make VA mortgages a lot less risky for lenders to make than more traditional type loans that do not have this protection. This is the reason why typically there are little to no down payment requirements, and better financing terms for Veterans on these types of loans.
VA stands for ‘Veterans Affairs’, as VA loans are specifically intended for Veterans and Service Members who possess a valid Certificate of Eligibility (COE). VA loans typically refer to home loans given to qualified veterans through the Department of Veteran Affairs who is guarantor of these types of loans. They are usually considered easier to obtain than traditional mortgages, although there still remain specific qualifications to be eligible.
VA loans can only be used to finance the purchase of a primary home. This loan type is not eligible for use when purchasing investment properties, or even vacation homes.
Another limitation comes in the form of the size of the loan itself. While there is technically no ‘cap’ on the loan amount, the VA limits its guaranty. That number varies by region. The typical maximum loan amount in most areas is $417,000, but in some high cost areas, this maximum is set higher at $625,000. The VA guarantees these mortgages to a maximum of 25% of the loan amount.
They also may only be utilized to finance homes in the United States, as well as properties in US territories.
Why should you get a VA Loan?
There are many benefits that can be gained for Veterans with a VA loan. The primary benefit is that VA loans permit individuals to buy property with a low down payment, and in some cases, no down payment at all. The other benefits of a VA loan are as follows:
• Lack of pre-payment penalty fees
• Lower potential closing costs
• Removal of premiums for mortgage insurance
• Potential for interest rate negotiation
• Possibilities for home warranties if a property under construction has been VA-inspected
• Options for VA aid for temporary incapability to pay, and
• Loan assumption by buyers if an individual wants to sell his property
What are the VA qualifications?
In order to qualify for a VA mortgage, you first must be a current or former military member. Many members of the military may qualify, however, this is by no means a guarantee. You will still need to meet specific loan, credit and income requirements to confirm your eligibility. Hence, not all Veterans are automatically eligible for the program and ensuring you are eligible is one of the first steps you can take.
– Served 181 days during peacetime
– Served 90 days during wartime
– Served 6 years in the Reserves or National Guard
– Have been a spouse of a service member killed during the line of duty
How much can I borrow?
If you are looking to buy a home, there is also the possibility of no down payment programs. For ‘traditional’ borrowers in this current real estate market, getting a mortgage without a down payment is next to impossible. However, VA loans can often be secured without a down payment, making it easier Veterans who can borrow up to $417,000 without a down payment in most areas of the country’. Typically, saving for a down payment can take some families years to accomplish, so this is a big advantage when searching for a home.
You can also avoid mortgage insurance with a VA mortgage. Many other loan types, such as FHA or loans with small down payments attached, require the homeowner to carry mortgage insurance. That is not the case is a VA loan. That can mean big savings on a monthly basis when it comes time to start paying the mortgage. While the bar is generally lower in terms of qualifying for a VA loan, lenders still need to check things like credit score, income, etc. Having a good credit score and sufficient income to repay the loan are going to help when it comes to getting any loan, and a VA loan is no different.
VA loans can be a great way for current or past service members to get into a home without some of the usual hurdles like a large down payment. As with any home loan, there are several steps to be completed, so it is important to understand the eligibility requirements and be organized before heading out to start shopping for your home.
If you are looking for help qualifying for a VA loan or the best mortgage rates, please call us today at 1-800-779-4547 and we would be happy to help you!
Hi, my name is Erik Sandstrom. I’m a proud sponsor and mortgage expert on LoanSafe.org. I’m also a sale’s manager and loan officer with Caliber Home Loans. If you have a question or are looking for a VA Loan with the best rates, please call me direct at 619-379-8999 or email me using the contact form below.