VA HOME LOAN
WHAT IS A VA LOAN?
The US Government's VA loan program helps veterans, active-duty service members and their families qualify for a home loan. Backed by the US Department of Veterans Affairs, VA loans feature no down payment or private mortgage insurance (PMI) requirements.
ARE YOU QUALIFIED FOR A VA HOME LOAN?
A VA loan is a no-brainer for qualified homebuyers and refinancers. The intended candidate is a service member or surviving spouse with a clean financial record. Ask yourself these four questions to determine your status:
Are you a current or ex-military personnel?
Are you the surviving spouse of a current or ex-military personnel?
Have you defaulted on a loan within the last 12 months?
Have you declared bankruptcy within the last two years?
If you answered "YES" to either of the first two questions and a resounding "NO" to questions three and four, you are most likely qualified for a VA loan!
To be eligible, you must serve for 90 or more days in wartime or 181 or more days in peacetime. In both cases, the stipulation is waived if you are discharged due to a service-related disability. Reserves and National Guard soldiers must serve for at least 6 years to be eligible.
Spouses of deceased service members are eligible for VA loan benefits, provided they have not remarried and that the deceased either:
Died in service or from a service-related disability.
Was missing in action or a prisoner of war for at least 90 days.
Was rated totally disabled and was eligible for disability compensation at the time of death.
Children of deceased veterans are not eligible for VA loan benefits.
THE VA ADVANTAGE
VA loans are fully backed by the government and offer a myriad of advantages for your home purchase or mortgage refinance. Here are the six biggest:
No money down
With VA loans at or under the local conforming limit, down payments are an option—not a requirement. This amount is $453,100 for most of the country and $679,650 in high-cost areas. The VA allows you to purchase jumbo loans, but requires you to supply 25% of the difference between the loan amount and the loan limit.
PMI typically adds 0.2-0.9% of expenses to your monthly mortgage payments when you put less than 20% down. With a VA loan, you can wave goodbye to PMI!
Fewer credit restrictions
Reduced restrictions mean easier qualification. With a VA loan, you’re allowed a higher debt-to-income ratio and afforded more leniency with your credit score.
The VA allows sellers to assist with up to 4% of closing costs.
Borrowers can refinance their homes with a VA streamline or cash-out loan. The streamline version lowers the mortgage rate of an already existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.
The VA allows for new construction loans and increases to purchase loans for renovation projects. The VA’s Energy Efficiency Improvement program lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation, storm windows and more.