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You may be eligible for a VA loan, but do you know what benefits it provides when buying a home? Those who serve our country can uniquely benefit from a VA loan.
The U.S. Department of Veterans Affairs backs VA loans, allowing lenders such as Homefinity to offer better terms to eligible homebuyers.
We’ll explain how to know if you’re eligible, as well as the top 5 VA loan benefits available when purchasing a home.
How to Know if You’re Eligible for a VA Loan
If you are actively serving or have served, you may qualify for a VA loan. Some military spouses are also eligible. More specifically, if one of the below circumstances apply to you, you will likely qualify for a VA loan:
- Active-duty military
- A veteran who was honorably discharged
- Separated from military service in a situation other than dishonorable discharge
- Served at least 90 consecutive days of active service during wartime. Or served at least 181 consecutive days of active service during peacetime
- Served at least 90 consecutive days of active duty. Or served more than six years of honorable service in the National Guard or Selective Reserve.
- Qualified surviving spouse of a deceased veteran
There may be exceptions to these qualifiers, as well as additional circumstances that could make you eligible.
To find out if you’re eligible and to move forward with a VA loan, fill out a VA Certificate of Eligibility (COE). A Homefinity lender can help you apply, you can apply online through the VA’s benefits portal, or by mail with VA Form 26-1880.
You don’t need a COE before applying for a mortgage. However, it is required before you can get final approval on a mortgage.
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Top 5 Benefits of Getting a VA Loan to Buy a Home
1. Flexible options
In terms of the types of VA loans available, there are options for fixed rate and adjustable rate loans, as well as programs to help you buy, build, or renovate a house or condo. You can also refinance an existing mortgage. With these options, VA loans apply to homebuyers in various situations.
2. No down payment required*
One of the most unique VA loan features is that those who are eligible often benefit from having no minimum down payment requirement. When financing the home purchase with a VA loan, you don’t have to pay any percentage of the home’s value upfront.
This differs from other loans, such as a conventional mortgage, with down payments ranging from 5% to 20% of the home’s price. An FHA loan requires at least a 3.5% down payment.
*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds the VA county limits. VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. Homefinity is not affiliated with any government agencies. These materials are not from the VA or any other government agency.
3. No mortgage insurance
There are no monthly mortgage insurance premiums or PMIs that would add to the cost of your monthly payments. With conventional and FHA loans, these insurance payments are required, unless you make a down payment of 20% or more of the house’s price.
4. Lower closing costs
Closing a loan involves the services of several professionals, leading to a certain level of costs. However with a VA loan, these costs are likely to be lower.
The VA limits what fees and costs veterans will pay at closing. If you’re financing a home with a VA loan, you can request that the seller pays all of the loan-related closing costs and up to 4% of the purchase price of the home. This is for expenses such as prepaid taxes and insurance.
5. Better terms even with low income or credit score
If you’re financing a home with a VA loan, the credit score requirements are often more forgiving than those of a conventional mortgage.
Lenders may also accept a higher debt-to-income (DTI) ratio* from homebuyers. You can carry a higher amount of debt compared to the income you earn, than you would be able to with a conventional or FHA loan. A DTI ratio of under 60% is often accepted for VA loans, depending on your other financial factors.
You’re more likely to get approved if you have enough consistent income to pay the added cost of a mortgage.
*Debt-To-Income (DTI) ratio is monthly debt/expenses divided by gross monthly income
Considerations for Getting a VA Loan
When considering a VA loan, you’ll also want to discuss with your lender the various trade-offs that may accompany the benefits. For example, the government sets stricter requirements for the condition of the home you’re financing.
This could involve stricter requirements for appraisals and inspections. However these are meant to ensure the home is in good condition for both you and the lender.
Apply for a VA loan
Our loan officers at Homefinity can help you find out if you’re eligible for a VA loan. They can guide you through the benefits available to you and recommend the best possible loan options.
Reach out today and get started. Make the most of your VA loan benefits when affording your home.
VA loans subject to individual VA Entitlement amounts and eligibility, qualifying factors such as income and credit guidelines, and property limits. Homefinity is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency.