For veterans, buying a home can be made easier by using a VA home loan. Unfortunately, all too many service members are not aware that they’re eligible or how the process works. They might not know about all the benefits of using a VA home loan can include. Learn more about VA home loans now to see if this might be a good option for buying a new home.
What is a VA Loan?
VA home loans are mortgages that are issued by private lenders but backed by the Department of Veteran Affairs. There are eligibility requirements that a veteran must meet, limitations on homes that can be purchased, and other criteria to be aware of. Still, for those who qualify, this provides an excellent opportunity to buy a home. With a reduced reliance on credit scores and no down payment, most veterans will find this a good option if they’re ready to purchase a home.
Who Can Apply for This Loan?
A VA loan is only available to certain people, including active-duty military personnel and veterans. However, the loan is also available to eligible spouses and spouses of fallen soldiers in certain circumstances. Those who think they may be eligible can investigate the application process to confirm whether they can use this type of loan.
The Importance of VA Loans Today
For active-duty personnel, veterans, and select spouses, the VA home loan provides the opportunity to purchase a home without worrying too much about a credit score or needing to save the funds necessary for a down payment. The loans can be for any amount and can be used to purchase a variety of different homes, thus giving buyers a better chance of buying a home they’ll love.
What You Might Not Know About VA Loans
There is often a lot of mystery surrounding VA home loans, and those who qualify may not know what they can and can’t do with this type of loan. Some facts that most veterans may not know about these loans include the following:
No Down Payment or Mortgage Insurance
VA home loans do not require a down payment. They also don’t need to purchase mortgage insurance, which most lenders require so that homebuyers can save money on the life of the mortgage.
No Limit to Loan Amount
The affordability of a VA loan is only limited by the loan amount for the buyer. The VA does not have any restrictions on how much the mortgage loan can be or how much of it will be covered. The limitation can, however, come from the lender, who will not approve a loan amount that the buyer’s income cannot cover.
VA Loans are Used for More Than Buying
VA home loans can be used to buy a new home, get an equity line of credit, or refinance a loan. These options can help with repairs or other necessary needs that may include saving money on the cost of the mortgage.
No Prepayment Penalty
Most lenders have a prepayment penalty since paying the loan off faster means paying less in interest. VA home loans, however, do not have this type of penalty, so the mortgage can be paid off as quickly as the buyer would like.
VA Loans Have Lenient Requirements
Once someone qualifies for a VA home loan, the requirements are fairly lenient. It’s possible to receive a VA home loan with a low credit score, a foreclosure, or bankruptcy at least two years before applying for the mortgage. One limit, however, is that the foreclosure cannot be a foreclosure on a VA home loan unless it has been repaid.
Reusable Benefit for Buyers
A VA home loan can be obtained as many times as an eligible buyer may need. Once the original loan is repaid, the buyer can use the VA home loan again to purchase a new home. The benefit doesn’t expire once someone becomes eligible, so this can be done at any time.
Not Just for Single-Family Homes
While most buyers may opt for a single-family home, VA home loans can be used for other types of property, as well, such as condos or manufactured homes. Buyers can also use them to purchase a duplex or triplex they plan on living in.
Not For Fixer-Uppers or Investments
VA loans do have some requirements and are not approved for homes that will need significant repairs. This may limit the number of houses to choose from, depending on the mortgage amount and what the buyer is looking for in a home.
Surviving Spouses Can Use VA Loans
While VA loans are generally limited to active-duty personnel or veterans and their eligible spouses, surviving spouses may also be able to use VA loans. There are some limits, such as not being remarried at the time, but it’s something to look into for those who may qualify.
VA Loan Rates are Lower
Since the VA guarantees the mortgage, lenders are often willing to offer lower interest rates to those who use a VA loan. This means buyers can save a significant amount of money over the length of the mortgage.
Some Veterans Can Avoid the Funding Fee
A funding fee is usually required for those who use a VA loan, and this can be up to 3.3% of the total loan amount. However, if someone was disabled during their service, they may avoid the funding fee, saving them more money in the long run. Talk to your lender about the possibility of avoiding the funding fees.
In closing, as an active-duty member of the military or a veteran, you have the option of getting a VA home loan. These loans do have a few requirements and limitations, but if you qualify, it’s a great way to purchase the home you’ve always dreamed of having. Start the application process today to learn more about what will be required and what you can buy if you are approved for a VA home loan.
