The VA Loan is a mortgage loan issued by approved lenders and guaranteed by the federal government. Since its inception, the VA Loan program has helped place more than 20 million veterans and their families into an affordable home financing situation.
There are 3 primary benefits of a VA Home Loan:
- No Down Payment
- No Private Mortgage Insurance
- Competitive Interest Rates
The VA mortgage offers 100% financing to veterans and their spouses for the purchase of owner occupied homes. Some people don’t realize that they can use their VA benefits to buy up to a 4-family unit. You could live in one unit and have three other tenants pay your mortgage, even with no down payment.
In addition to there being no down payment, veterans do not have mortgage insurance on the loan. There is a funding fee that ranges from .5 to 3.3%. The funding fee is waived for a veteran that receives a minimum of 10% VA disability compensation.
If you are a veteran, be sure that you have your DD-214 form to provide your lender so they can order a Certificate of Eligibility for you. This is the only additional paperwork you will need to get your loan processing underway.
VA Loan Processing
There are some differences in the actual processing of a VA Loan.
- The VA allows sellers to pay closing costs but doesn’t require them to. So the buyer might need money for closing costs. Borrowers may also need money for the earnest-money deposit.
- There are limits on loan amounts. The limits vary by county.
- VA loans are assumable, but if you let someone assume it then you can’t use that amount of VA loan eligibility on your next home.
- If you are purchasing new construction, the VA requires that the builder be a VA-approved builder.
- The perception is that VA appraisers are more strict or conservative, but this is a misnomer. The VA is primarily concerned about health and safety issues.
If you are a veteran or eligible surviving spouse, you can become a homeowner by taking advantage of this government-backed loan program. We can provide recommendations for lenders experienced with this process. Contact us today for more information.