The VA home loans are one of the best and safest methods to use when buying a home. Active duty and former service members can qualify. If you are a Disabled Veteran, you may qualify for additional benefits on a VA home home loan. The VA Home Loan Program does not limit the number of times a veteran may use the program.
The VA mortgage loans extend to not only the Army, Navy, Air Force and Marines but also to Reservists and National Guardsmen.
Some of the benefits of the VA Home Loan Program are:
The VA guarantees home loans so the Veteran pays little or no down payment
Seller may pay closing costs so you do not have any out of pocket expenses
No monthly Home Owner’s Insurance is required
VA Home Loans are assumable
It is easier to qualify for a VA Home Loan than a conventional loan
VA Home Loans are refinanceable
No Money Down based on county loan limits
You do not have to put any money down to qualify for a VA Home Loan if the purchase price is at or below the county loan limit for the county where the property is located. County loan limits start at $417,000 but are higher in high cost of living areas. Check with your lender for the county loan limit for your specific county.
All loans have closing costs associated with them. However, if the seller agrees to pay the closing costs, you may be able to purchase the home with no out of pocket costs.
The VA Funding Fee
The Veterans Administration assesses a Funding Fee to all VA loans. The amount of the funding fee is 2.15% (first time use regular military) 2.4% (first time use Reservists and National Guard) and 3.30% (subsequent use). The fee can be added into the amount of the loan to be paid over the life of your VA home mortgage loan or be paid in full at closing. The VA Funding Fee replaces the much higher priced Mortgage Insurance required when you get a conventional or FHA home loan. If you are a Disabled Veteran, you may qualify to have the fee waived completely.
Assumable VA Mortgage Loans
VA loans are also assumable. If the person assuming the mortgage is a veteran with VA eligibility, the original veteran will not be giving up the amount of eligibility that they used to get the loan at the beginning. Veterans should use great care and closely investigate the terms of an assumption before allowing someone to assume their mortgage.
Qualifying for a VA Mortgage Loan
The VA offers excellent qualifying standards. Even if you have experienced some financial difficulties in your life that caused your scores to be low but have maintained a good payment history over the past year or so, you may qualify for a VA mortgage loan. Additionally, the VA has relaxed standards for foreclosure/short sales, and bankruptcy. In general if a Veteran has experienced a foreclosure, short sale or chapter 7 bankruptcy the veteran will be eligible for a VA loan 2 years after the event. Veterans who are in an active chapter 13 bankruptcy may qualify for a VA loan after a 12 month satisfactory payment history.
VA Mortgage Loans may be refinanced
VA mortgage loans may be refinanced to take equity out of a property or to reduce the interest rate. The VA interest rate reduction refinance loan (IRRRL) is a streamline process allowing a loan to be refinanced to a lower interest rate without all of the criteria normally associated with a normal refinance; the veteran can secure a lower interest rate with a simple mortgage payment history and credit score check without the need for an appraisal or income and asset verification and can roll the costs of the transaction into the loan so there are no out of pocket costs. A cash-out refinance requires documentation of all income and assets, job history, appraisal, credit history etc.