Are you one of the more than 16 million veterans and 1.3 million active-duty military members in the United States today? If so, you are likely eligible for a VA loan. Here are the facts about VA loans you need to know about these helpful mortgages.
Private lenders issue VA loans, and the VA guarantees them
The Department of Veterans Affairs sponsors all VA loans, while private mortgage lenders originate them. This means that the VA will repay the lender up to a certain percentage on any defaulted VA loan. That guarantee removes a lot of the risk for lenders, and they are willing to be more flexible on loan terms with borrowers.
Do Not Require A Down Payment
Most loans require at least a 3.5% down payment. On the median home price of $450,000, that would be almost $16,000 a buyer would have to save up. But with the guarantee of the federal government, VA borrowers do not have to put down a single penny for down payment if they choose.
VA Loans Come with Lower Interest Rates
Because the VA backs these loans, lenders can offer veterans and service members lower mortgage interest rates than conventional or FHA loans.
Have No Minimum Credit Score
With most mortgage programs, a low credit score could disqualify you completely from buying a home or refinancing. While there is no stated minimum credit score for a VA loan, each lender will have their own standards, but they are typically lower than with conventional mortgages.
VA Loans Do Not Require Mortgage Insurance
Most loans with a down payment of 20% or lower require borrowers to pay for mortgage insurance, a policy that protects the lender if the buyer defaults. Thanks to the VA backing, VA loans allow borrowers to skip this fee that can cost roughly 2% of the loan balance each year.
You can use benefits repeatedly
As a veteran or service member, you are not limited to just one VA mortgage loan in your life. If you bought with a VA loan, you could sell and rebuy with another VA loan as long as you haven’t used up all your entitlement.
VA Loans Come with Funding Fees
While borrowers do not have to make a down payment, the VA does require a funding fee between 0.5% and 3.3% of the loan amount. You can pay this fee upfront or roll it into the loan balance. In some cases, such as for disabled veterans, lenders may waive the funding fee.
Entitlement Never Expires
If you served long enough to qualify for VA benefits based on your service duration and period, you can use your VA loan entitlement at any time in your life. It has no expiration date.
Surviving Spouses Can Get VA Loans
Un-remarried spouses of service members killed in action can typically qualify for VA loans. And receive the same benefits, including zero down payments and low interest rates. They do not have to pay the VA funding fee.
You can use it to buy, refinance, or obtain a home equity loan
The scope of VA loans is broad. They can be used for home purchases, to refinance an existing loan, and even to pull cash out of your home with a VA Cash Out loan.
You really can’t go wrong with a VA loan. They offer some of the best benefits and terms available on the market.
Facts About VA Loans
Contact us today to get Pre-Approved for a VA Loan!
These materials are not from HUD or FHA and were not approved by HUD or a government agency
