Your Guide to VA Home Loans
A VA home loan (also known as a Department of Veterans Affairs home loan) is one of the most useful military benefits. If you qualify, you can buy or build a home, or refinance an existing home mortgage, with as little as $0 down, great rates and financing with no mandated cap. Another benefit over traditional mortgages is that there is no PMI (Private Mortgage Insurance, the monthly insurance fee charged to protect the bank until you reach at least 20% equity).
For most service members and veterans who qualify, a VA home loan is one of their most valuable benefits and a no-brainer over traditional mortgage types. This section offers an in-depth explanation of the VA loan process and instructions on how to submit an application.
A VA home loan makes home-buying more affordable for millions of veterans and active service members.
VA Loan Basics
While VA Loans are issued by private lenders they are backed by the U.S. Department of Veterans Affairs, which is why they can be offered oftentimes with little to no down payment and no PMI. Since 1944, the VA has helped over 25 million military men and women purchase homes using the VA loan mortgage program, according to VA statistics.
VA Loan Eligibility
Are you eligible to use a VA loan? If you have served on active duty for at least 90 days or met a variety of other service benchmarks created for Guard and Reserve members, the answer is likely “yes.”
VA Loan Process
Like any mortgage process, obtaining a VA home loan has a variety of important steps you must work through before you can get the keys to your dream home.
- Apply for a VA Home Loan
- Verify eligibility
- Verify financial qualifications
- Find your new home
- Verify property qualifies
- Submit a qualifying offer
- Close
- Move in
VA Loan vs. Conventional Home Loans
VA loans are some of the only loans remaining that offer no down payment. With conventional loans, the buyer is required to provide up to 20% down, which can often make it too difficult to purchase the right type of home for your family. Since with a VA home loan there’s no private mortgage insurance, this can save hundreds of dollars a month over conventional loans, depending on how much you borrow.
Because the VA loan is backed by the government, the rates are often much better than a conventional loan, which will save you a considerable amount of money over the life of your home loan. Lastly, the VA home loan has a more lenient lending policy, allowing you to qualify for a VA loan when you might not meet all the requirements for a traditional loan.
VA Loan Funding Fee and Others Costs
Nearly every VA loan comes with a VA Funding Fee. This fee goes directly to the Department of Veterans Affairs and helps back the VA loans of the future. Not everyone has to pay the fee, such as military men and women with a service-related disability. Fees range from a little over 2% for first-time VA loan recipients, to 3.3% for repeat home buyers. The good news is you can roll this fee into your loan amount.
In addition, closing costs are less, and often the seller can pay these costs, too.
Here are the up-to-date VA funding fees:
VA Loan Limits
In the past, the VA capped the amount of money available for a VA home loan. But as of 2020, the VA no longer mandates loan limits for first-time use. That means you can buy the home you need through your VA home loan benefit. If you’ve already had a VA Home Loan, there is a cap. Please contact us as these limits vary by location.
How Much Can I Qualify for on a VA Loan?
The amount you can qualify for varies depending on a number of factors. One of the biggest factors is your debt ratio. It helps to determine the amount you can afford to pay each month.