The VA Loan program offers government-backed loans laden with benefits that offer homeownership to veterans who may struggle to obtain financing otherwise. However, it’s important to know, the Veterans Administration does not lend financing directly to individuals. They do, however, guarantee a portion of the payments to the lender, in the unfortunate event the homeowner defaults on the loan. If you’re eligible for a VA Loan, you are more likely to get approved for your home loan, since this guarantee makes you a better candidate for financing than someone without the VA guarantee. Let’s look at five ways a VA Mortgage Loan will make owning your home easier:
No minimum credit requirements
The VA will not require a minimum credit score. However, something to keep in mind, your lender will most likely require a credit score of 620 or higher to obtain financing. Underwriting is much less restrictive, as well, with more “forgiveness and understanding” being granted to service members and their families with hardships due to involuntary circumstances.
Closing Costs Charges
Closing costs charges are limited by VA Rules. The seller may pay all closing costs up to 4% of the home price. It is possible to avoid paying anything out of pocket to close on your home.
With full entitlement, no down payment is required; however, an earnest money deposit may be required upon contract signing. Many of our clients or their realtors are able to negotiate reimbursement or offset costs at closing.
No Mortgage Insurance
As with other FHA and conventional loans with less than 20% down, a VA loan doesn’t require mortgage insurance. The VA loan allows veterans 103.3% financing without private mortgage insurance. This contributes to larger savings with each monthly payment.
You can pay off your VA loan early without fear of getting hit with any prepayment penalties.
You may be eligible for a VA loan if you’ve:
- Served 90 consecutive days of active service during war, or
- Served 181 days of active service during peace, or
- Served more than 6 years in National Guard or Reserves, or
- You are the surviving spouse of a service member who has died in the line of duty or because of a service-related disability.
As with any lending, every situation is different. Be sure to discuss any concerns with both your realtor and with us to ensure your financing is catered to you. Contact us today to set up your appointment. We’ll be happy to start your pre-qualification process at your earliest convenience.