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What is a VA loan
A VA loan, is a powerful ally for eligible Veterans and military service members looking to finance a home purchase. Backed by the U.S. Department of Veterans Affairs (VA), the purpose of a VA loan is to provide increased flexibility for Veterans who are ready to bunk at a permanent address as homeowners.
A brief overview of Veteran and service member eligibility
If you served in the military or the National Guard, then a VA loan may be an option you can consider. There are different thresholds for eligibility depending on length of your wartime or peacetime service experience. According to the VA benefits and eligibility website:
- Military members must actively serve a minimum of 90 consecutive days during wartime, or 181 consecutive days during peacetime.
- National Guard reservists must complete six credible years of service.
- An honorable discharge from service is required if no longer active.
- Service members who completed less than the mandatory service time may be eligible if they were discharged due to a service-connected disability.
Surviving spouses of military personnel are also eligible to receive VA loan benefits. In addition, you can use your eligibility to acquire multiple VA loans. Make sure you check out the full benefits available to military personnel on the VA benefits website.
Why is a VA loan appealing to Veterans and active-duty service members?
A VA loan can increase the purchasing power for Veterans and active-duty service members who are in the market for a home.
With a VA loan, no down payment is required if a home’s purchase price falls below a predetermined limit. Starting in early 2020, this will change thanks to the Blue Water Navy Veterans Act of 2019, which will eliminate the cap on VA loan amounts. That’s right; eligible Veteran homebuyers could purchase a home with no money down. Many homebuyers delay their home search in order to save up for a down payment. With a VA loan, eligible homebuyers could purchase a home sooner and enjoy all the benefits of homeownership. In addition, mortgage insurance isn’t required. This means that eligible Veterans can finance 100 percent of their home purchase without incurring additional payments for mortgage insurance.
On top of reducing up-front costs and fees, an additional benefit of the VA loan is greater flexibility with eligible buyers’ debt-to-income ratio. A debt-to-income ratio is a common method for conventional loan (non-VA loan) lenders to gauge whether borrowers can afford their monthly mortgage payments.
VA benefits support loan refinancing, too. For any Veteran or current service member interested in refinancing through a VA refinance loan, a recent blog post shares the triumphs of a Veteran who sought to consolidate his debt.
Applying for a VA loan
The chief concern of any home loan lender is to determine how much house a client can afford. It’s important for an eligible Veteran to pick a home loan lender with ample experience supporting Veterans and military service members with VA loans. Your home loan officer is there to help you through the financing and home purchasing process. With a preapproval in hand, eligible Veterans are competitive buyers in the market.
Evergreen Home Loans™ has extensive experience supporting Veterans and active-duty service members who are in the hunt for a new home. Our home loan experts are your advocates for the homebuying process by answering all your questions and working to simplify the VA loan process for you and your family.
Frequently asked questions:
The VA funding fee is a one-time payment that eligible borrowers typically make to the VA when they secure a VA loan. Some borrowers may qualify for an exemption from paying this fee.
Do VA loans require private mortgage insurance (PMI)?
VA loans do not require PMI or any other type of ongoing mortgage insurance.
Can I buy land with a VA Loan?
You cannot buy land by itself with a VA loan; however, you can secure a VA construction loan to both buy land and build a primary residence on it.
How do I apply for a VA loan?
To begin the process of applying for a VA loan, it’s a good idea to verify your VA benefit eligibility. You can determine this information by obtaining your Certificate of Eligibility (COE), or your loan officer might be able to directly obtain this for you. Once verified, you can apply for a loan with any VA-approved lender.
Can a VA loan be used to refinance an existing home loan?
Refinancing an existing home with a VA loan is possible. Refinance VA loan programs include a cash-out or a Streamline. Also known as an Interest Rate Reduction Refinance Loan (IRRRL), a Streamline refinance lets eligible borrowers use their prior VA loan entitlement.
