VA home loan is federal government guaranteed mortgage loan by U.S. Department of Veterans Affairs. It is for veterans, returning service members and their eligible surviving spouses to become homeowners. If you are one of them then you can buy, repair or refinance your home. But everybody isn’t eligible for this loan.
The government does not give a loan to the veterans directly in VA Home Loan program. Normally approved lenders like banks or mortgage companies issue VA Home Loans. They have established some rules and requirements. The requirements to meet are such as credit standard.
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VA Loan VS Traditional Mortgages
Military homebuyers get some extra loan facilities in VA Home Loan program than other traditional mortgages. As veterans are government backed so they don’t need to buy private mortgage insurance. But it is a requirement for a traditional mortgage when they finance more than 80% of the properties value.
The interest rate is significantly low than private loans. So this loan is far more safe, flexible and easy to qualify. The qualification process needs fewer requirements.
Advantages of VA Home Loan
Very often there is no down payment as long as the sales price is less than the appraised value. The closing cost is limited by rules and it is less than traditional home loans. Even sometime seller may pay the closing cost. In the case of paying the loan off early, the lender can’t charge a penalty fee to you. Another significant advantage is that you don’t have to be a first-time home buyer.
Eligibility
A military person, veterans, National Guard members and reservists can apply for a VA Home Loan. Spouses of military persons who sacrificed their life or die on duty or became disable during duty time are also eligible for VA Home Loan.
Active service members can qualify after 6 months of the job but for National Guards and reservists, this time, is 6 year. But if anyone is called to active duty then he can apply after 181 days of service. Military persons who are on active duty in a foreign country get the highest priority to get this loan. They applicants must obtain the eligibility certificate.
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Fees
The cost of getting VA Home Loan is less than all other type mortgage or private loan. But still, there is a one-time funding fee. This fee varies depending on the type of veterans and down payment of the loan.
For first timer armed forces home buyers the fee is 2.15% of the total loan amount if the loan is with zero down payment. For second time home buyers, the fee is 3.33% of the loan. But he can reduce the fee with down payment. Like he can get the fee 1.25% of the loan with a 10% down payment. For reservists and National Guard member, the fee is higher than military personnel.
VA Home Loan Rates
The VA Loan rates for 30 years fixed mortgage is 3.5% and the APR is 3.833%. For 15 year fixed mortgage, the rate is 3.125% and the APR is 3.717%. APR means Annual Percentage Rate. It includes all additional the yearly loan cost with interest. So we see that it is higher than interest rate and it is a very important number for a loan.
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Buying Process
- Confirm all the eligibility requirements.
- Find an approved VA Home Loan lender and set the loan amount, interest rate, closing cost and discount points. You can want pre-qualified at this step.
- Obtain the Certificate of Eligibility (COE).
- Choose a home to purchase and sign a purchase agreement.
- Apply for VA Home Loan with all the credit, income and eligibility information.
- Then lenders will do the loan process by reviewing and examining your documents to give you the loan.
VA Home Loan is one of the few numbers of loan which can get without down payment. It is the easiest way to get a loan for the veterans, military personnel, and their spouses. Though it is not a direct loan from the government but is guaranteed.
