Who is Eligible for VA Home Loans?
You may be eligible – even if you are not active duty military. The list of those who are eligible has expanded to include:
- Active-duty personnel
- Reserve members
- National Guard members
- Some surviving spouses
You must also have good credit, sufficient income, and a valid Certificate of Eligibility (COE). Active duty members generally qualify after about six months of service, and Reservists and members of the National Guard must wait six years before they can apply, unless they’re called to active duty before that time. In that case, they gain eligibility after 181 days of active duty service. Still unsure if you’re eligible? Speak with your HomeBridge Mortgage Loan Originator or check the Department of Veterans Affairs website for a detailed list of VA Loan requirements for military members, veterans, and military spouses.
What are the Benefits and Advantages of VA Loans?
The VA Loan program is one of the most attractive and flexible loans available, and they’re exclusive to military personnel, veterans, and their families. Perhaps the two biggest benefits that make these loans more affordable than other traditional loans are that the borrower usually doesn’t need to make a down payment¹, and there is no private mortgage insurance (PMI) requirement². VA home loans are among the few 0% down home loans available on the market today and, since VA Loans are backed by the government, they don’t require you to purchase mortgage insurance. Other VA loan benefits include:
- Competitive interest rates
- Less restrictive qualification requirements
- The right to prepay your mortgage without penalty
- Ability to finance the VA funding fee
- Limits on closing cost amounts
- Assistance to veteran borrowers in default due to temporary financial difficulty
Regulations and Fees
Although the costs surrounding a VA Loan are generally lower than other types of low down payment mortgages, they still carry a one-time funding fee. In most cases, VA borrowers can roll this funding fee into their overall loan amount. The amount of this fee varies depending on the amount of the down payment and the type of veteran getting the loan. For example, a borrower in the armed forces getting a VA Loan for the first time, with zero down payment, would pay a higher fee than someone in the same situation who makes a 10 percent down payment. And, each time you take advantage of the loan, the fee will be slightly higher than the last time. Also known as a funding fee, this fee goes directly to the VA to ensure the program keeps running for future generations of military homebuyers. If you or your spouse have been injured while on duty and are classified as a disabled veteran, you could be eligible for a VA funding fee waiver.
VA Mortgage Rates
VA Loans are backed by the federal government and military personnel, veterans, and military spouses who qualify typically find that VA home loan rates are generally lower than those of a conventional mortgage. In many cases, interest rates fluctuate and are determined by a combination of your credit score, debt-to-income (DTI) ratio, loan duration, and the condition of the current market. Because of the risk involved in issuing a VA home loan, a good credit score almost always translates into a better rate. However, even if your credit isn’t in perfect shape, you may still qualify for a VA loan over other loans such as conventional loans.
Interest Rate Reduction Refinance Loan
If you have an existing VA loan and are interested in obtaining a lower interest rate, you can refinance with an Interest Rate Reduction Refinance Loan (IRRRL), also referred to as the VA Streamline. With an IRRRL, you can also refinance an adjustable rate mortgage into a fixed rate mortgage. An Interest Rate Reduction Refinance Loan may be done with no appraisal³ and a FICO score of at least 580. An IRRRL must be a VA to VA refinance loan, meaning you cannot refinance a property that was purchased using a non-VA loan.
¹100% financing up to county loan limits may be available for purchase loans or 1-unit cash-out refinances. Cash-out not available in Texas. Minimum FICO score requirements apply.
²Most VA loans require a funding fee.
³An Automated Valuation Method (“AVM”) is used to determine market value if the new loan amount is less than 125% Loan-to-value (“LTV”) as per the AVM. However, if the new loan amount exceeds 125% LTV, a full appraisal must be ordered.
Starting the Loan Application Process
Now that you’ve determined your eligibility, you can begin the loan application and home buying process. This process involves generally six important steps:
- Finding a VA-approved lender
- Pre-approval for a loan
- Finding a home
- Drawing up the purchase contract
- Getting the property appraised by the VA
- Finalizing the loan.
Fortunately, a HomeBridge Mortgage Loan Originator can help guide you through the process, answering any questions you may have along the way. They will also be able to discuss your income, length of service, and any other qualifying requirements in-depth, so contact HomeBridge and fill out the form on this page today to learn more about VA loan benefits.
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