VA Loans
What are VA Loans?
A VA loan is a type of mortgage backed by the US Department of Veterans Affairs. VA loans are designed to help active-duty military and veterans achieve the American dream of homeownership. Started in 1944, it helps them buy homes with favorable terms. These loans have lower interest rates than regular ones. They’re only available to service members and some military spouses. Private lenders like banks issue VA loans but are guaranteed by the VA against default. The guarantee covers up to a quarter of the loan amount. In 2024, the maximum loan amount is $766,550. VA loans can also be used to refinance existing mortgages. They’re popular among first-time homebuyers in the military due to their great benefits.
VA Loan Benefits
- No down payment is required: Servicemembers can own a home without saving for a down payment.
- Lower interest rates: VA loans offer lower interest rates compared to conventional loans.
- No monthly mortgage insurance premiums: With a VA loan, you won't pay monthly
- No prepayment penalty: You can sell or refinance without penalties, though cash-out refinances have different rules.
- Reduced funding fees: You might get reduced fees or exemptions for service-connected disability compensation.
- Ability to finance the funding fee: The funding fee can be included in the loan amount.
- Less than perfect credit usually accepted: You don't need perfect credit for a VA loan.
- Up to 100% Cash-Out Refinance: Use your home's value to get cash for various purposes.
- VA assistance for financial difficulties: Borrowers facing certain financial difficulties can get help from the VA.
What are the VA Loan Requirements?
The United States Department of Veteran Affairs lists many eligibility requirements for a VA home loan. The borrower must possess a Certificate of Eligibility (COE), decent credit, and a steady income.
The COE can be received if an active-duty soldier has been honorably discharged and has completed at least two service requirements. These requirements include qualifying wartime and peacetime periods, active duty dates, and minimum service.
VA Loan Eligibility:
- 90 days of service during wartime.
- 181 continuous days of active service during peacetime.
- 6 or more years of service in the National Guard or Reserves.
- Being the un-remarried, surviving spouse of a servicemember who died in the line of duty, or as a result of a service-related disability
Additional Requirements for VA Loans:
- Payment of a Funding Fee: Varies based on down payment and military category.
- Move-in requirement: Within 60 days of purchase, with exceptions in some cases.
- Usage restriction: Must be for a primary residence; cannot be used for investment or second homes
Types of VA Loans
FAQ
Yes, it is required. It is a fee paid directly to the Department of Veterans Affairs so that they can guarantee your loan and provide you with the opportunity to receive a loan with little to no money out of pocket.
It depends on several factors including: Whether you are Active Duty, Retired, Guard or Reserve and whether you this is a first time use, subsequent use, or a cash-out refinance as well as how much of a down payment you are putting down. The fee can range from as little as 1.25% up to 3.3% of the loan. Generally, the more money you put down the lower the VA funding fee. Please contact us and we will help you to determine how what the exact cost of the VA Funding Fee would be for your particular situation.
No, you can include the VA Funding Fee in your loan and pay the funding fee over the course of your loan.
Yes, however with a VA loan if you are purchasing a new home the seller can pay for all or part of your closing costs.
A VA Streamline Refinance is a refinance option that is available if you already have a VA mortgage and you want to lower your interest rate with little or no out-of-pocket closing costs. You don’t have to provide bank statements, W2s, job verification or paychecks.
