“What You Need to Know About VA Loans”
“Since its inception in 1944, the VA loan program has helped more than 20 million veterans and their families experience the pride of homeownership. While the VA loan process is quite similar to that of a conventional loan, there are differences and advantages that some veterans may not be aware of.
VA loans are mortgage loans issued by approved lenders and guaranteed by the U.S. Department of Veterans Affairs. One of the biggest advantages of a VA loan is that qualified buyers are able to buy a home with virtually no money down. In fact, about 90 percent of VA buyers purchase a property with no down payment.
This feature is different to other government-backed loans, like those backed by the Federal Housing Administration (FHA) and the U.S. Dept. of Agriculture (USDA), which both enforce PMI. This advantage is often overlooked, but the benefit can mean significant monthly savings for VA buyers.
Although the costs of acquiring a VA loan are generally lower than other conventional loan programs, there is a one-time funding fee paid directly to the VA, which is “used to offset the few loans that go into default, and further reduces the cost to taxpayers, ensuring the VA Home Loan program continues for future generations.” The amount varies, depending on the nature of the borrower’s service, if any down payment was made, or whether the buyer has a prior VA loan. Borrowers with service-connected disabilities are typically exempt from the funding fee.
While there is no maximum loan amount, the VA does limit its guaranty. Depending on eligibility, in most areas of the U.S., a veteran can borrow up to $417,000 without a down payment.
Who is eligible for VA Loans?
The sad fact is that many eligible veterans are missing out on this beneficial program. REALTOR.com says that VA surveys show that about 1 in 3 home-buying veterans aren’t aware of this benefit. While it may not necessarily be the best fit for every veteran borrower, it’s a great option to explore.
According to the VA, eligible applicants include; veterans who meet “length of service” requirements; service members on active duty who have served a minimum period; certain Reservists and National Guard members; and certain surviving spouses of deceased veterans. There are other groups that may be eligible, so check with your lender or contact the VA Eligibility Center at 1-888-768-2132.”
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