As a veteran or serving in the military, you have great benefits when buying a home. The mortgage options specifically for veterans are called VA Loan.
What is a VA Loan?
A VA loan is a mortgage loan provided by private lenders and backed up by the U.S. Department of Veterans Affairs. This mortgage loan helps active duty service members, U.S. veterans, and widowed military spouses.
How do VA Loans Work?
Since VA loans are guaranteed by the government, they don't work exactly like a regular mortgage. This mortgage loan differs because the government agrees to repay a portion of the loan if you miss payments or at risk of losing your home. Therefore, it's considered to be less risk to banks compared to other loans. This ultimately makes VA loans easier to get.
What are VA Loan Benefits?
VA loans have unmatched benefits. Unlike a typical mortgage loan, VA loans do not require a downpayment. They also don't require private mortgage insurance which means no recurring insurance payments. When it comes to qualifying, there is no minimum credit score, lower interest rates, and higher debt to income ratio is allowed.
Some Common Questions
How do I get proof of eligibility?
A VA-approved lender can use an online program called ACE - the Automated Certificate of Eligibility - to get you started in the VA loan process. Another option is to fill out a Request for Certificate of Eligibility and mail it to the Eligibility Center.
Are there fees associated with my VA loan?
There is a "VA funding fee" that is required by law. First-time home buyers will pay a little over two percent for a 'no money down' loan while a second-time buyer's fee is about three percent. VA refinances will also have similar price guidelines.
Do I have a fixed rate VA loan?
Veterans are eligible to choose between a fixed-rate loan or an adjustable-rate loan. Do your research to see which loan option may work better for you.