VA Home loans are government-backed access to cash created for veterans. But not every veteran can use VA home loans for a few reasons, such as not fully knowing the benefits. Some might think that it involves a long process that discourages them. If you or someone you know is a veteran looking for a way to afford a home, this article will teach you facts about VA Home loans that you shouldn’t miss.
1. Pay No Down Payment And Mortgage Insurance
If you’re worried about affording the down payment, the VA home loan doesn’t require borrowers to put a down payment first. Other government-supported loans like FHA loans require a down payment of as low as three to five percent of the price.
A VA loan aims to help you purchase a home as soon as possible, so you don’t have to wait long until you have enough money. The VA home loan lenders won’t ask for private mortgage insurance (PMI) costs. That’s a savings of USD$150 per month on a house that costs USD$250,000.
Using a VA loan, you can pay the same monthly dues for a home costing USD$30,000 or more but skip on PMI. It helps you reflect high upfront costs and improves your buying power. You can ask legit private lenders like Security America Mortgage about VA Home loans.
2. Eligible individuals
If you are among the following, you might qualify for a VA home loan:
- You’re meeting length-of-service requirements as an active–military duty member.
- You are meeting the required credit and income set by the lender. While VA loans don’t have a minimum credit score, lenders can still set their own rules. But they will look into your ability to make regular repayments.
- You are the spouse of a service member who became disabled or has perished on active duty. You must not have remarried after December 16, 2003, or beyond 57 years old.
- You are the spouse of a service member who is missing in action or a prisoner of war.
- The property you want to be your main residence passed safety standards and building codes.
3. The Underwriting Requirements
Lenders have varying standard criteria on what borrowers are considered an excellent risk for mortgage approval.
But do keep in mind among the requirements of how much mortgage you can borrow is that borrowers must prove that they have enough income to pay for the mortgage and that they are not currently paying off a large debt. Borrowers with below 620 FICO scores will find getting approval difficult even if there is no required credit score minimum.
Another benefit of the home loan is that you can use it for two years after filing for Chapter 7 bankruptcy. Another option is when 12 months have passed after filing for a Chapter 13 bankruptcy.
4. There Are Different Types Of VA Loans
Borrowers with military backgrounds can choose from different VA loans to refinance, buy, or use the money for construction. The following are some of the different types of VA loans:
5. No Equity Regular Finance
The refinancing type allows borrowers access to 100% value of the home and rolling in of the closing costs. As a bonus, you can even use the money to pay for a traditional loan or an FHA mortgage loan with this alternative.
6. Loan For Renovation
Military borrowers choose this loan type if they want to refinance or buy a home that requires many repairs with the benefit of rolling remodeling expenses into the loan. You’re allowed to refinance 100% of the home’s value even if it costs more than a home improvement.
7. Construction Loan
Even when you don’t have a down payment, the construction loan type allows you to use the one- or two-time close construction loan program. It helps pay for building the house and converts to a loan once the construction is complete. The two-time closing, as aptly named, has two closings of the loan. The first is for acquiring the construction loan itself, and the second pertains to the new loan for paying off the construction loan.
8. Condominium Purchase With VA Loan
Not only could you purchase land for home construction, but if you’d rather live in a condominium, you can use a VA loan to purchase from approved developers. The Department of Veterans Affairs keeps a record of condo developers you can choose from, and if they don’t have it, you can ask the lender if they can approve it. But realize that the approval can take months, and there is no approval guarantee after completing the process.
Military personnel now have a chance to own homes that grants them leeway in specific requirements. VA loans are government-backed loans that they can use to purchase, construct, repair, and refinance homes with various benefits for their government service. If you plan to acquire one, research legit lenders who can offer you better rates than others. Owning a home won’t take forever when you’re aware of how VA loans work.