VA Loans for Veterans
VA Loans for Veterans: A VA loan is a mortgage loan program offered in the United States, it was established in the year 1944 by US government with a view to help returning service members for purchasing a home.
It is supported by U. S. Departments of Veterans Affairs (VA) and works as a lifeline to military service people who want to buy house but finding it difficult to buy a house due to tough credit standards and down payment requirements. The loan is actually issued by qualified lenders.
It helps veterans and their families for home finance, the VA loan is designed to offer long term financing to American veterans or their surviving spouses, if they don’t remarry. The VA loan is available for buying a new house, renovating a house or refinancing an existing mortgage.
The VA direct home loan is provided in the areas where private financing is not easily available. Veterans Affairs considers areas with housing credit shortage and usually includes rural areas as well as small cities and towns which are not in the vicinity of metropolitan cities or community areas of large cities.
If you are a veteran, read on to find out if you can save money with it. Following given are the details of VA loans. Advantages and disadvantages are also discussed.
Advantages of VA Loans for Veterans
VA loan offers various benefits. Some of the most striking and appealing benefits of VA loan are:
- 0% Down Payment: You don’t have to pay any down-payment and it is the only loan available today to offer house loan at 0% down payment.
- No PMI: You don’t need to buy Private Mortgage Insurance as Veterans Affairs Loans are government backed, banks do not require you to buy Private Mortgage Insurance. Lenders are not allowed to charge PMI on VA loans and this is a great advantage as it will save you considerably large amount of money in a long run.
- Comparative Interest Rates: The VA guaranty offers lenders much safety and flexibility and as such Veterans Affairs loan is offered at a more competitive rate in comparison to non-VA loans.
- Easier to Qualify: As the VA loan is backed by the US government, there is a less risk involved and qualification standards are also not much difficult to meet and as such banks find it easy to sanction a loan.
- Loan Limits and Funding Fees: The US government places limit on the lenders for the appraisal fees and closing costs. Veterans who qualify for VA loans can get a loan worth amount $417,000 without any down payment. Funding fee is to be paid and it goes to VA only. This fee is collected to ensure that the Veterans Affairs loan program keeps running for future generations of veterans. How much funding fee is to be paid depends upon the circumstances of the borrower and there is no funding fee for the veterans with service connected disabilities.
Disadvantages of VA Loans for Veterans
The main disadvantage is that you have to pay a high one-time funding fee. Usually it is about 2%. You can roll this fee amount in the VA loan ranging from 0%-3.15% as veterans are allowed to get VA loan up to 103.15% of sale value of the house
In case of refinancing loans from VA loan to VA loan (also known as an IRRRL – interest rate reduction refinancing loan), there is a funding fee of about 5%. Here also you can borrow up to 105% of the loan amount.
In refinances for a new Veterans Affairs loan, 90% of the reasonable value can be borrowed. It is better you calculate this amount before applying a VA loan.
Eligibility Requirements for a VA Loan for Veterans
Though VA loan is for military service members, you have to meet certain criteria to qualify for the loan.
You must satisfy one of the following conditions:
1. You have served during war for at least 90 consecutive days while in service.
2. You have served at least for 181 days in service during peacetime.
3. You have served in the National Guard or Reserves for more than 6 years.
4. You are a spouse of a person who died while on duty or who became disable due to service related reason.
Certificate of Eligibility: To be eligible for a Veterans Affairs loan, you have to obtain a certificate of eligibility from the Department of Veteran affairs. You can get help from Veterans Loan Specialist to get the certificate of eligibility. The certificate can also be obtained by filling out a certificate of eligibility request form known as VA Form 261880.
Income Documents Required: There is no threshold limit on income for the VA loan applicants. But it is expected that you have stable and reliable income to meet your monthly expenses as well as to pay for mortgage payment. It also requires that you are able to save some money each month. It is known as residual income and by enforcing this requirement it makes sure that you can meet some emergency needs. Residual income is also reason why Veterans Affairs loan is offered at a low foreclosure rates.
Additional Eligibility Requirements: Private lenders who provide home VA loan also needs to fulfil some other additional requirements other than debt, income and credit score. The applicant also must not have been discharged for dishonourable reasons.
VA Credit Score: VA loan lenders will analyse applicants past credit performance in order to approve the loan. If you have made timely payments for last 12 months, it serves as good credit on your side and demonstrates you would be able to repay future credit obligations. You need good credit score to get your VA loan approved.
To conclude, VA loan offers various benefits and the only loan with no down payment. If you meet eligibility requirements, you can get the loan approved and fulfil your dream of having your own home. Read more articles on wink24news.
More Related Queries:
• department of veterans affairs provider portal
• va home loans for disabled veterans