For any veteran looking to buy a home, a Veterans Affair home loan is a great option. The biggest incentive is that a VA loan allows veterans to buy a home without a down payment.
This allowed veterans to buy a home without spending years saving up for the down payment.
The government doesn’t directly service these loans, but it does work with private lenders to make sure each veteran gets a house and mortgage that works best for them. The Department of Veterans Affairs guarantees a percentage of the loan, which replaces the down payment.
Before applying for a VA loan, there are some basics you must know:
What makes a VA loan different?
What sets a VA loan apart from other mortgages is that it does not require any down payment. The Department of Veteran Affairs backs every VA home loan, replacing the down payment.
The interest on a VA loan is negotiable unlike a traditional mortgage.
With a VA home loan you can prepay on your mortgage without any penalty. This gives you the option of paying off your loans faster than a traditional home loan, saving you a lot of money in the long run.
Any veteran who chooses a VA loan does not have to get mortgage insurance.
There are also limitations on buyer’s closing costs, appraisal fees, and any other possible fees from the private lender. You also receive an appraisal with the specific details of the property value.
For many VA loans on new houses, it can come with mandatory inspections during the construction process and also usually a 1-year warranty from the builder. This keeps you safe as the borrower of the loan.
With a VA loan, the Department of Veterans Affairs will assist in getting a warranty from a builder during construction.
The Department of Veterans Affairs can also help during a time of financial difficulty. Depending on the individual situation, this can help a veteran stay out of foreclosure.
Another huge benefit is that VA home loans are available to widows and widowers who lost their spouse while serving active duty.
Veterans aren’t denied from a loan based solely on a low credit score. Typically, they just want to see the last 12 months of your credit history to determine your eligibility for a VA loan.
What options are available with a VA loan?
If you want to purchase a home to live in, a VA loan is a great option. A VA loan is not for a vacation property or a property you want to rent out.
With personal properties, the options are two/four unit homes, single-family homes, mobile/manufactured homes, attached townhouses, and condominiums. Both the townhomes and condominiums can only be VA approved projects.
VA loans are also available for altering homes, building a home, refinancing an existing home loan, repairing a home, improving or buying a manufactured home lot, or installing solar or cooling systems.
The property being purchased must be located in the United States.
How to apply for a VA loan
Any veteran who served active duty for 90 days during war, or 180 days of active duty during times of peace can apply for a VA loan. Reservists and National Guard members are also allowed to apply after six years of service, but can apply after 180 days if they are called to active duty.
If you meet these requirements, the first step is to get a Certificate of Eligibility from your local Veterans Affairs office. You can also apply online at www.vba.va.gov.
After you apply, call the VA after ten days to check the status of your loan at 1 (888) 768-2132, option 1, between 8:00 – 4:00 Eastern time. You can also go to your local VA office to receive more information on this step.
This will tell you if you are eligible for a VA home loan.
Once you know if you are eligible, the next step is to meet with a local real estate agent to find homes that meet your needs and also follow the VA home loan guidelines.
The accepting factors include income, credit history, all assets, and any other traditional mortgage information.
From there, the process is the same as regular home buying. Take your time finding the perfect home.
What is the maximum VA home loan?
While there are no technical maximums when it comes to a VA home loan, there can be county limits that are used to calculate the amount you can borrow.
Usually any veteran can get a loan up to $417,000 without a down payment.
What are the repayment options?
VA home loans come with a guaranteed thirty-year repayment plan. Some of the repayment options include graduated payment mortgages, traditional fixed payments, or growing equity mortgages. Each one will depend on your mortgage lender.
How many times can a veteran use a VA loan?
There are times when veterans who used a VA loan in the past can still have what is referred to as “remaining entitlement”. As of 2014, the amount any veteran is entitled to is $36,000.
Also, that number can reset once the entirety of the first loan is paid off in full when the house is sold or all payments have been made.
With all kinds of loans and mortgages, it is best to make sure the VA loan is the best option for you. There are many other options available when it comes to mortgages, so it is worth it to take your time with this process.
For any further information, please contact your local VA office. You can also receive a VA Pamphlet 26-4 or a VA Pamphlet 26-6 from your local VA office to learn more about these loans to see if it is right for you.