Are you a veteran or an active-duty service member looking to refinance your mortgage or buy a home? A VA loan is the best option for you, as it comes with amazing benefits. And this benefit makes home ownership very affordable.
Applying for a VA loan is a great step because you can get approved with no down payment. Aside from that, there are no private mortgage insurance requirements.
VA loans can be used to do many things. For instance, you can use it to purchase a primary residence. You can also use it to refinance a current mortgage or cover renovation costs. Another thing you should know about VA loans is that their rates are highly competitive.
What is a VA loan?
A VA loan is a mortgage loan program in the United States that is guaranteed by the U.S. Department of Veterans Affairs. This program is designed to help eligible veterans, active-duty service members, and certain surviving spouses purchase homes with favorable terms and conditions.
Lenders can offer loans because they take on less risk with a conventional mortgage. Taking a loan without a down payment and with less solid financials is possible with VA loans. But you still need to meet certain requirements before the lender approves the loan.
How Does a VA Loan Work?
Very simple! The process is usually simple and straightforward. It is also similar to that of a traditional mortgage. The first thing is to fill out paperwork from the VA that verifies your eligibility.
In a situation where the lender does not make payments, the government will repay the lender a portion of a VA loan. This is the reason why lenders can offer loans without any down payments. However, you can get VA loans from traditional lenders, like credit unions and banks.
Who Qualifies for VA Loans?
Not everyone qualifies for VA loans. But before you apply for one, you need to make sure you are eligible. The government offers opportunities for certain military spouses to qualify for VA loans. Veterans and those on active duty are not left out.
The set of people eligible for VA loans are those who are currently on active military duty. Veterans who were honorably discharged and met the minimum service requirements are also qualified.
VA Home Loans Benefits
Do you know that VA loans have so much to offer lenders? Well, now you know. Let’s take a look at the benefits below.
- One of the benefits is that you can refinance a VA loan in the future.
- Closing costs may be lower.
- There are no prepayment penalties if you decide to pay the loan off early.
- The maximum DTI ratio is determined by the lender.
- You can get approved even if you have a higher debt load.
- You can get approved with no down payment.
- You will not pay mortgage insurance over the loan term.
Lastly, with VA loans, the cost of borrowing is low. However, VA lenders can only charge 1% of your loan to cover their fee. This makes VA loan closing costs very affordable compared to other loan programs.
How to Apply for VA Loans
Applying for a Veteran Affairs loan is very easy. You can apply for a loan through a VA lender once your paperwork is in order. Follow these steps below to apply:
- The first step is to get preapproved.
- Make an attractive purchase offer after you have found a home.
- If your offer is accepted, sign a purchase contract with the buyer.
- Wait for the results of the home inspection and VA home appraisal.
- After that, submit any additional documents the underwriter needs to process your loan.
- Handover payment for closing costs
- Then sign the closing documents.
Bear in mind that not all institutions offer VA loans. So you have to look out for lenders that you can work with. Don’t just choose any lender; go for the one that can answer your questions and guide you through your loan process.
FAQs
How Much Can I Borrow With A VA Loan?
VA loans allow borrowing, but the approved amount is at the lender’s discretion. For those with an active or defaulted VA loan with 0% down payment, the maximum is $726,200 in typical areas and $1,089,300 in high-cost ones.
I Have Already Obtained One VA Loan; Can I Get Another One?
Yes, you can! You can take another loan, depending on the circumstances. Once you have paid off your former Veteran Affairs loan and disposed of the property, your eligibility is reusable.
What is the Required Down Payment for VA Loans?
Veterans who are eligible for a loan usually do not need any down payment. But if you have an outstanding VA loan on another home, you may make a down payment. Also, if you don’t have enough entitlement to cover the guarantee on the new loan, you will need to make a down payment.
What is the Minimum Credit Score for VA Home Loans?
No minimum credit score is required for VA home loans. But lenders usually have their own qualifying criteria. So ask your lender for its minimum credit score. Note: Lenders with a 620 credit score or higher will easily be approved.
