VA loan: a comprehensive guide
This guide provides an overview of the VA home loan program, including eligibility requirements and benefits. Read on to learn the details about this mortgage program.
Get the home you deserve with a VA loan
Interested in learning what is a VA loan? Then you’ve come to the right place. This comprehensive guide will cover everything you need to know about this mortgage.
So whether you’re a first-time homebuyer or looking to refinance your current home, read on for all the details!
What is a VA loan?
VA loan is a type of mortgage issued by the U.S. Department of Veterans Affairs, or simply VA. This home loan allows borrowers to purchase, refinance, renovate or build a house.
This type of mortgage is destined exclusively for military members. It was designed to make home-buying easier for people serving the country. Also, they are easier to qualify for!
VA loans are made by banks and mortgage companies, not by the U.S. Department of Veterans Affairs. In this loan, private lenders offer competitive terms and interest rates.
However, when applying for a VA loan, there are some qualification requirements borrowers must meet. Not all who served in the U.S. military will qualify for this loan.
Unlike other government-backed loans, VA loans allow borrowers to use the amount to buy a single-family home, a condo, multi-unit, new constructions, and a manufactured home.
What is the difference between a VA loan and a regular loan?
VA loans are one of the most powerful mortgages currently available in the market.
The home-buying process might be similar to conventional loans, but some differences must be considered.
For example, when it comes to payments, VA loans may offer 0% for qualifying borrowers.
And this is while conventional loans usually require homebuyers to put down 20% of the property price!
Additionally, VA loans don’t require Private Mortgage Insurance (PMI) from their clients. On the other hand, Private Mortgage Insurance is mandatory for regular loans if put down less than 20%.
As noted, home loans backed by the U.S. Department of Veterans Affairs deliver lower interest rates than conventional loans.
Also, they offer less strict requirements as long as borrowers meet the eligibility criteria.
VA loan pros and cons
VA loans can greatly help U.S. military members who want homeownership, delivering benefits to new homebuyers.
However, considering all the details is fundamental before making any decision. After all, every financial product has its drawbacks too.
So let’s take a look and compare the advantages and disadvantages of a VA home loan!
- VA loans have no minimum down payment requirement. Borrowers can finance 100% of their purchase;
- There are no loan amount limits;
- This type of home loan doesn’t require Private Mortgage Insurance (PMI);
- There are no income restrictions;
- VA loans offer no income verification/no appraisal refinance loan options.
- The eligibility requirements are based on military service;
- The loan amount can’t be used to finance a second home or investment property;
- VA loans deliver higher appraisal costs than FHA and conventional loans;
- Refinancing options takes longer than conventional loans.
Types of VA loans
VA loans can be used for multiple purposes, including purchasing, refinancing, renovating, and building a home. Therefore, various VA home loan options are available in the market.
The most common types of VA loans include:
- VA Home Purchase Loan: The basic mortgage backed by the U.S.; Department of Veterans Affairs;
- VA Jumbo Loan: Destined for those who want to borrow a larger amount that exceeds the conforming loan limits;
- VA Renovation Loan: It allows military borrowers to buy and refinance a home and covers the costs of any repair or home renovations;
- VA Construction loan: With this type of home loan, borrowers can build a home with no down payment;
- VA interest rate reduction refinance loans (IRRRLs): These allow homeowners with a VA loan to lower their interest rates and monthly payment.
These were five of the most common VA loans. By doing some additional research, you’ll find even more options available.
Who qualifies for a VA loan?
VA loans have less strict credit, income, and assets requirements. However, borrowers must meet some U.S. Department of Veteran Affairs guidelines.
For example, VA loans are destined exclusively for Veterans and service members.
Additionally, not everyone who served in the U.S. Military will qualify for this type of loan. There is a time of service requirements:
- 90 consecutive days of active duty or during wartime;
- 180 consecutive days during peacetime;
- More than six years of service in the National Guard of Reserve.
Spouses of service members who lost their lives on duty or due to a service-connected disability will qualify for VA loans.
Additionally, borrowers must have a Certificate of Eligibility (COE), a document that proves they served in the U.S. Military.
How can you apply for a VA loan?
To apply for a VA loan, you must find a qualified lender that offers this type of home loan. In most cases, the application process starts with getting preapproved for it.
Lenders might request some of your personal, financial, and employment information. This process can be done online, and borrowers can see the offer they qualify for.
Also, as previously said, borrowers must prove their military service through a Certificate of Eligibility (COE).
After getting preapproved, borrowers can shop around for a home and make a purchase offer.
Also, the lender will underwrite your finances to ensure you qualify for a VA loan, and there are VA appraisals to check if the property meets the requirements.
Next, it is time for you to sign papers and receive your property keys! Pretty simple process, right?
VA loans are a great resource for military servers to buy their dream home! Through this home loan, they can access lower down payments, interest rates, and some great benefits!
Now that you know what VA loans are and their perks, it is time to work. If you’re eligible, you can start your homebuying process today!
And remember, don’t hesitate to ask for help if you need it!
Lastly, we have another useful article to help you make a more informed decision on your homeownership journey!
Discover the difference between landing money through a mortgage lender and a bank! We’re sure you’ll find some great tips in the following article! Let’s go!
About the author / Beatriz Vieira
Ink Business Preferred℠ Credit Card!
Maximize your business potential with the Ink Business Preferred℠ credit card. Earn valuable points, access exclusive travel perks.Keep Reading
Is it possible to get cheap car insurance quotes nowadays?
The best options for cheap car insurance are here for you. We'll guide you through all the details on how to maximize your savings!Keep Reading
New American Funding Mortgage review: rates, terms, and more
Needing a home loan with a lower down payment and rate transparency? Then check our New American Funding Mortgage review!Keep Reading
You may also like
Stimulus Check: cash payments to help needy families
Find everything you need to know about claiming your Stimulus Check. Get up to $1,400 per adult to help provide for your family! Read on!Keep Reading
How to travel on a budget: tips and tricks
Do you want to explore the world but don't have much money? Check out these budget travel tips and see the world without breaking the bank!Keep Reading