The Veterans Administration gives veterans, active-duty military members and eligible spouses many benefits, including valuable VA home loan benefits. But, what does this mean and how does it work? Your VA loan benefit can be used to buy or refinance a home. Even if you have already bought a home using your VA loan benefits, you may have remaining eligibility to buy again. There are many advantages of VA loans, but the low-cost and flexible qualification and eligibility guidelines help military members achieve the goal of homeownership.

Quick VA loan facts you might not know:

  • You don’t have to be a first-time homebuyer.
  • You can reuse the benefit.
  • VA-backed loans are assumable, as long as the person assuming the loan qualifies.
  • You can get a VA conforming or jumbo loan.
  • You can check your benefits through the VA Benefits Website.

The benefits of a VA loan include:

  • No minimum down payment required
  • Not having to make a cash down payment is one of the biggest benefits of a VA loan.* Typically, most buyers are required to put at least 3%, with 20% being the traditional down payment amount. Veterans and eligible spouses can save their money for the other costs associated with buying, like moving.

No monthly mortgage insurance premium

Buyers not using a VA loan benefit may put down less than 20%, but a monthly mortgage insurance premium is charged to the buyer until they have met the 20% amount. While you won’t have to make a down payment, there is a VA funding fee that can be financed into the loan.

Lower interest-rate loans

Your VA loan benefits also come with lower interest rates. Lower interest rates can mean lower monthly payments and lower payments over the life of the loan. Even compared with FHA loans, veterans receive lower rates using their VA loan benefits.

Closing-cost assistance

In addition to not having to make a down payment, buyers can ask the seller to pay all closing costs associated with the loan. Closing costs include: loan origination fees, discount points, appraisal fees, title searches, title insurance, surveys, taxes, deed-recording fees and credit report charges. Even when you don’t have to make a down payment, there will still be closing costs.

Additionally, the VA limits the types and amounts of fees that can be charged to VA borrowers.

Cash-out and Interest-Rate Reduction Refinance Loan (IRRRL)

For military members who already own a home, your VA loan benefit can be used to refinance your home. For cash-out refinances, you can finance up to 100% of the value of your home. Many conventional loan programs go up to 80%, leaving you with less access to the equity in your home.

If you currently have a VA loan, you may refinance into an IRRRL. An IRRRL also known as a VA Streamline lets you refinance to reduce the interest rate on your current VA loan. You can refinance from an adjustable-rate mortgage (ARM) to a fixed rate mortgage. An IRRRL lets you lower your interest rate to lower your monthly mortgage payment.¹

You can re-use your VA loan benefits

VA allows multiple uses of your benefit as long as you have enough entitlement remaining from previous paid-in-full VA loan(s). This means that you could buy another home after you have satisfied the terms of your first VA home loan. So, don’t pass up an opportunity to save money and use the advantages of a VA loan.

Still have questions about applying for a VA loan? Contact a Mortgage Loan Originator today!

*On primary residence and up to county loan limits.
¹By refinancing your existing loan, your total finance charges may be higher over the life of the loan.
LR 2017-358

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