A Mortgage Made for America’s Heroes!
Learn more about the benefits of having a VA (Veteran Affairs) loan to purchase your home
A VA Loan is a mortgage option available to veterans, active-duty service members, and eligible surviving spouses, backed by the U.S. Department of Veterans Affairs (VA). Designed to make homeownership more accessible, VA Loans offer competitive interest rates, no down payment requirements, and no private mortgage insurance (PMI). This benefit allows eligible borrowers to secure favorable terms and purchase or refinance a home with greater financial ease.
VA Loan Benefits
No Down Payment Required:
VA loans allow qualified veterans, service members, and some surviving spouses to purchase a home without making a down payment. This is a significant benefit as it reduces the upfront cost and makes homeownership more accessible.
Competitive Interest Rates:
VA loans typically offer lower interest rates compared to conventional loans. This is because the VA guarantees a portion of the loan, reducing the lender’s risk and allowing them to offer more favorable terms.
No Private Mortgage Insurance (PMI):
Unlike conventional loans, VA loans do not require PMI, even with a down payment of less than 20%. This can save borrowers hundreds of dollars each month and thousands over the life of the loan.
Easier Qualification Requirements:
VA loans have more lenient credit and income requirements than conventional loans. This can make it easier for veterans with less-than-perfect credit or lower incomes to qualify for a mortgage.
Limited Closing Costs:
The VA limits the amount that veterans can be charged for closing costs, which can result in significant savings. Additionally, sellers can pay all of the veteran’s loan-related closing costs and up to 4% in concessions.
No Prepayment Penalties / No Loan Limits
VA loans do not have prepayment penalties, allowing borrowers to pay off their loan early without incurring additional fees. This can be beneficial for those who want to save on interest costs over time. Also, as of 2020, the VA no longer limits the size of VA loans for eligible veterans with full entitlement. This allows qualified borrowers to purchase higher-value properties without needing a large down payment.
Frequently Asked Questions About Buying a Home
Who is eligible for a VA loan?
VA loans are available to veterans, active-duty service members, National Guard members, Reservists, and some surviving spouses. Eligibility is based on length of service, duty status, and character of service. A Certificate of Eligibility (COE) from the VA is required to verify eligibility.
What is a Certificate of Eligibility (COE), and how do I get one?
A COE is a document that proves a veteran’s eligibility for a VA loan. It can be obtained through the VA’s eBenefits portal, by mail using VA Form 26-1880, or through a VA-approved lender.
Do VA loans require a down payment?
No, VA loans typically do not require a down payment, allowing eligible borrowers to finance 100% of the home’s purchase price.
Are there any upfront costs with a VA loan?
While VA loans do not require a down payment, they do have a VA funding fee, which helps offset the cost of the program to taxpayers. The fee can be financed into the loan amount and varies based on the loan type, down payment (if any), and whether the borrower has used their VA loan benefit before.
Can I use a VA loan more than once?
Yes, you can use a VA loan multiple times, as long as you meet the eligibility requirements and have sufficient entitlement. If you have repaid your previous VA loan in full and sold the property, you can apply for a new VA loan with full entitlement.
What types of properties can I buy with a VA loan?
VA loans can be used to purchase or refinance a single-family home, condominium, multi-family home (up to 4 units, with one unit occupied by the borrower), or certain manufactured homes. The property must meet the VA’s minimum property requirements.
Can I refinance an existing mortgage with a VA loan?
Yes, the VA offers two main refinancing options: the Interest Rate Reduction Refinance Loan (IRRRL) for lowering the interest rate on an existing VA loan, and the VA Cash-Out Refinance, which allows homeowners to take out cash from their home equity.
What credit score do I need to qualify for a VA loan?
The VA does not set a minimum credit score requirement, but most lenders prefer a score of at least 620. However, some lenders may accept lower scores based on other factors, such as income and overall credit history.
Can I use a VA loan to buy a second home or investment property?
No, VA loans are intended for primary residences only. You cannot use a VA loan to purchase a second home, vacation home, or investment property.
What happens if I have trouble making my VA loan payments?
The VA offers assistance to borrowers facing financial difficulties. They can provide options such as repayment plans, loan modifications, and foreclosure avoidance advocacy. It’s important to contact your lender and the VA as soon as you anticipate trouble making payments.