If you served our country, then you qualify for a number of benefits as a thank you for serving our country. One of these benefits is a particular type of home loan know as a VA Loan, or Veterans Administration loan. This type of financing comes with significant financial benefits, and these loan requirements are often not as restrictive as some people believe. If this is a program you are interested in, read on for the ins and outs of VA loans!
VA Loan Facts
According to the most recent data, many veterans are taking advantage of loan programs available to them! Here are some facts on VA home loans:
- 624,546 home loans were guaranteed by the Veterans Administration.
- 306,879 VA home loans were made without a down payment.
- 2,055 grants totaling $118 million were provided to help seriously disabled Veterans purchase, modify, or construct a home to meet their needs.
VA Loan Myths Debunked
We asked Traci Stier, a loan consultant with Loan Depot, to help us debunk some common myths:
- VA loans have strict underwriting guidelines – FALSE
- This loan program is one of the most flexible of any loan programs.
- Veterans are weak borrowers – FALSE
- These loans have fewer defaults than there are with conventional loans.
- VA loans are for a marginal buyer – FALSE
- This program is a full qualifying loan. Borrowers must have sufficient income, assets, and credit to obtain one.
- VA loans take a long time to close – FALSE
- Similar to conventional loans, VA loans should close in 30 days or less. Lenders have full authority to underwrite and fund one without involvement by the Veterans Administration.
- VA loans are only for small dollar amounts – FALSE
- VA loans are available for up to $1.5 million.
Benefits of VA Loans
No Down Payment
- Compared to conventional and FHA loans this means a significant increase in monthly savings. It also means veterans can buy that dream home sooner rather than later. However, it is important to note that the sales price can’t be more than the home’s appraised value in order to qualify for a VA loan.
No Mortgage Insurance
- Conventional borrowers without 20% down typically have to pay private mortgage insurance. This additional fee is added to monthly mortgage payments and can add several hundred dollars to monthly expenses. Non-veteran homeowners continue to pay this insurance until they build 20% equity.
Competitive Interest Rates
- The VA’s guarantee gives lenders a sense of security that allows them to give competitive rates.
Limited Closing Costs
- All mortgages have fees and closing costs. However, the VA limits what can be charged to veterans. This makes homeownership for veterans more attractive and affordable.
Fewer Credit Requirements
- Veterans do not need to have perfect credit scores to get home financing. Additionally, VA loans are more forgiving when it comes to bankruptcies, foreclosures, or short sales.
- Once it is determined that a veteran qualifies for the VA program, they can use it multiple times throughout their life.
What Can Be Purchased with a VA loan?
A VA loan can be used for more than just the usual purchase of a house or condo. It can also be used to:
- Build a house
- Refinance an existing loan
- Make improvements to a home (ie solar heating or other energy conservation measures)
Buying Your Dream Home
The incredible benefits of a VA loan make owning a home possible for many veterans. If you are a veteran and would like to explore buying a home, let us know! We’d be happy to refer you to a lender who can help get the process started. Simply fill out the form below and we’ll be in touch soon!