The VA loan program carries many benefits, but perhaps the most notable are that you don’t need to provide a down payment to get approved. In addition, VA loans make it possible to have the home seller pay for some or all of the closing costs, instead of you. That means a VA home loan can help you get into your dream home with little to no money out of your pocket.
Here at MortgageAdvisor.com, we are dedicated to helping you understand all of the benefits and advantages that VA loans have to offer qualifying veterans.
VA Home Loan Benefits
- VA loan rates are usually lower than those of conventional loans and comparable to FHA loan rates.
- VA loans require no mortgage insurance, giving you a lower monthly payment.
- The loans can be assumed by a buyer who obtains credit approval.
- The VA limits the types of fees and fee amounts lenders can charge you.
- No prepayment penalties are allowed on VA loans.
- The seller can cover 100% of your discount points and other non-recurring costs (one-time loan and closing costs).
- The seller can contribute up to 4% of the sales prices towards your pre-paid expenses (property taxes, homeowners insurance, and pro-rated interest), the VA Funding Fee, and/or pay off debts you have to help you qualify.
- VA homeowners experiencing temporary financial difficulty can have forbearance (payment relief) extended to them.
- 30- and 15-year fixed rate loans are offered on VA loans, as well as 3/1 and 5/1 ARMs.
Regardless of if you’re a first-time VA loan applicant or if you’ve been through the whole process before, starting the process can feel like the hardest part. Fortunately, veterans will find a wealth of information about VA loans here on MortgageAdvisor.com and on countless government websites. See if you qualify for a VA loan.
About the VA Purchase Loan
For starters, who is eligible for VA loans? Certain members of the Selected Reserve and National Guard, active duty service personnel, and certain categories of spouses.
To purchase a home with a VA loan, program guidelines require:
- You are required to be an eligible veteran with the availability for home loan entitlement.
- The loan will need to be for an eligible purpose, while the purchase price cannot exceed the appraised value. Otherwise, you must pay the difference out of your own pocket.
- You must reside or intend to live in the property as your primary residence for a reasonable period of time (typically 60 days) after closing the loan.
- You must have sufficient income to pay the monthly mortgage payments on the loan, cover the homeownership costs, fund other obligations and expenses, and still have income for family support (a spouse’s income is considered in the same manner as the veterans).
To get started in obtaining your VA home loan, you will need two crucial things on hand:
- Certificate of Eligibility - This tells the lender that you are certified by the VA to be eligible for the program.
- Entitlement Amount - This spells out how much of the loan the VA will guarantee, and it makes clear whether you will need to make a down payment or not.
In VA loans, down payments are typically avoided, except in the following situations:
- The loan amount exceeds the Conforming Loan Limit of $417,000, or the limit applicable to the high-cost areas found here.
- The appraised value is less than the purchase price, but then it is negotiable with the seller.
- The borrower does not have full VA entitlement.
Take note here that a VA loan does guarantee that your new home will be a good investment or even that you will be able to sell it at the amount you paid. The VA also does not provide veterans with legal services should trouble arise between you and your lenders. The VA home loan program is provided simply to make it easier for veterans buy their own homes; the rest is up to you.
Have more questions about ordering your Certificate of Eligibility or about VA purchase loan requirements? Contact a Mortgage Advisor.