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VA Loan Programs

Military veterans have a huge advantage when buying their first home because the VA loan requires no down-payment. VA loan programs require no monthly mortgage insurance either. Having the ability to buy a house with zero down and low interest rates, make VA loans attractive for qualified veterans.

If you are serving or have served in the armed forces, then your timing couldn't be any better. The interest rates continue to break records and affordability maybe has never been better to buy a home in many of the states in the U.S. We suggest determining how much you can afford before you start shopping with a realtor. It does not hurt to have a pre-approval letter signed by a trusted mortgage company either.

Our service is simple, after you complete the form, we match you with lending sources that best meet your needs and credit profile in the neighborhoods that your desire buying a home. Please complete the application and our system will make every effort to match your request with VA approved mortgage lenders at no cost.

Why the VA Mortgage Program Is a Good Step for Military Home Buyers in the U.S.

There are approximately 22 million veterans in the US, and most of them are eligible for VA loans. There are many advantages to VA (Veteran's Administration) loans. This article will break down these advantages of the Veterans Affairs Home Mortgage Loan Program, and also offer some considerations if you thinking about a VA loan.

But first, let's take a close look at how the VA loan works.

VA Loan Basics

  • The VA does not really make loans. Instead, it offers a partial guarantee for lenders who offer mortgages and refinances, typically banks, credit unions and mortgage companies. The VA guarantee encourages lenders to provide veteran borrowers with more favorable loan options than on regular financing available to the wider public.
  • Most of the VA loan programs may be used to build or buy a primary home or for a cash out refinance. You cannot use a VA loan for a rental property or second home.
  • There are usually no limits on mortgage loan sizes with VA loans, unless you want a zero down loan. In that case, the cap for most parts of the country as of 2015 is $417,000. However, the limit on VA mortgages is higher in some higher cost counties in 22 states and in Washington DC.
  • The VA does not have a specific credit score requirement to get a loan, but lenders may have their own requirements.
  • To be eligible for a VA loan, you must have a Certificate of Eligibility. The Veterans Administration states that borrowers have to have been honorably discharged and meet specific service requirements. As of 2016, it has been reported that getting the certificate is getting easier. The VA is using an automated process to determine eligibility for VA loans.
  • Surviving spouses of veterans may be able to apply in some cases.
  • VA loans have a strict limit on fees to keep costs below those of conventional loans. However, the borrower usually has to pay a funding fee at loan closing. This may be added onto the loan balance. The fee may be from 1.25-3.30% of the loan value. The percentage will depend upon loan type, military status and size of down payment.

#1 Interest Rates Are Lower

Veterans from the US armed forces can enjoy rates that are a bit lower than conventional loans. For example, last year, the national VA mortgage loan average was approximately 3.59%, which was around .5% lower than the national average for conventional 30 year mortgages.

#2 No Down Payment

If the purchase price of the home does not go over the appraised value, there is no down payment requirement. This zero down home loan can save you as much as 20% of the loan value, compared to a conventional loan.

#3 No Private Mortgage Insurance Needed

If you do a low money down conventional loan of more than 80% of the homes appraised value, you must buy private mortgage insurance until you have 20% equity in the home. This can save you $200 per month in insurance costs.

#4 Closing Costs

There are strict limits on closing costs for VA loans. In most cases the closing costs are competitive. Most VA loans have a one-time .5% funding fee. However, disables veterans may be eligible for a VA home loan with no funding fee. Check with the loan officer to determine your eligibility.

#5 Credit Score

There is no minimum credit score needed. The VA will not deny your loan just based upon a low FICO score. Most lenders for VA loans will not tier the interest rates based upon score, either. Usually, the VA program just looks at the last 12 months of credit history. More important than credit score is documenting the proof that you have the income to repay the loan. However, guidelines are usually more flexible than for many conventional loans. Not all VA approved brokers will offer bad credit home loans, but some will so make sure you are shopping with a lending company that supports your credit.

#6 No Prepayment Penalty

Want to pay off your mortgage early? You can do so and not pay any extra fees or interest.

#7 Payment Help Available

If you get a VA loan and start having trouble making payments, the VA can negotiate with the lender on your behalf. They can help you to negotiate a repayment plan, a loan modification or options other than foreclosure.

Considerations for VA Loans

There are also some challenges and considerations with VA loans:

  • There tends to be more bureaucracy and red tape. So, you may need to wait longer for your loan to close. That said, the very generous terms of VA home loans usually making waiting worthwhile.
  • The funding fee for a VA loan if you are not making a down payment is usually 2.15% of the loan amount for regular veterans and 2.4% for members of the reserves. If this is not your first time using a VA loan, the fee is 3.3%. This is a cost that does not contribute to home equity, so it is basically a closing cost. Just keep this fee in mind as one of the costs of getting a VA loan.

The Bottom Line

A VA loan is often a very good option for military home buyers in the US. Because they are easy to qualify for and have no money down options, the VA mortgage loan program could be the right choice for you if you are a military veteran. 11 Reasons Why the Military Has an Edge with Guaranteed VA Mortgage Programs

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