VA Home Loans: What Do I Need to Know?
Veterans, active-duty service members, and their families have made countless sacrifices for their country. In thanks for their service, the Department of Veteran Affairs (VA) offers a valuable benefit towards homeownership: VA home loans.
Available to active-duty service members, veterans, and their surviving spouses, these loans help those who have served their country to buy, refinance, or renovate a home. This guide explores what you need to know about VA loans, including key benefits, eligibility, and what to expect in the loan process.
This article is written for information purposes only. Specific details and benefits vary. Please consult your loan professional.
Benefits of a VA Home Loan
VA home loans have numerous benefits for military service members and their families. Let’s take a look at four key advantages.
- No down payment or mortgage insurance (PMI)
One of the top benefits of a VA home loan is no down payment or mortgage insurance (PMI). In a conventional loan, down payments affect not only a loan’s interest rate and monthly payment, but the size of the loan. VA home loans do not require a down payment, easing the financial burden of homeownership. This also removes PMI, which is added for down payments of 20% or less on conventional mortgages.
- No borrowing limit
With full entitlement, eligible service members, veterans, and surviving spouses can borrow any amount their lender approves, with no VA-imposed limits. They may also use the VA home loan benefit over and over again, providing each loan is paid in full.
It may also be easier to qualify with a lower credit score.
The VA itself doesn’t require a minimum credit score, making these loans more accessible to homebuyers with lower credit scores. However, individual lenders typically do set their own credit requirements, so check with yours.
- Lower closing costs and interest rates
Lenders are not allowed to charge conventional loan fees for VA loans and are restricted on charging more than 1% of the loan on common lender fees. Another benefit is VA loan rates are typically lower than rates available to the general public.
Important considerations of VA loans
While VA loans have many benefits, there are a three items homebuyers may want to consider before making an informed choice if a VA home loan is right for them.
- Require a one-time funding fee
VA home loans are charged a one-time finding fee of 1.25 – 3.3% of the total loan amount. The fee amount will vary by the lender, type of loan received, the applicant’s military status, and other elements. Some VA loan applicants, such as Purple Heart active-duty recipients and certain eligible spouses, are exempt from the funding fee.
- Not all lenders offer VA home loans
VA home loans are not currently offered at all lenders. However, Blue Mountain Communities is proud to have partnered with preferred lenders that do offer VA home loans.
- Must be used to purchase a primary residence
There are some limits to which residences can be purchased with a VA loan, including the restriction that VA loans can only be used to purchase a residence the buyer intends to live in. Vacation homes, rental properties, and secondary residences do not qualify.
Who is eligible for VA loans?
VA home loans are available to qualifying active-duty service members, veterans, and surviving spouses. Eligibility criteria differ for each category. While active-duty service members must serve for at least 90 continuous days to meet the minimum service requirement, veterans’ qualifications vary slightly depending on the period served. Specific requirements may also apply to the National Guard and Reserve members. Head to the VA’s website for more information on eligibility.
Is a VA Home Purchase Loan right for you?
The most common type of loan distributed by the VA, the VA Purchase Loan enables qualifying applicants to buy their primary residence regardless of the type of structure. It can be a single-family home, manufactured home, condo, or townhome.
Most homebuyers looking to purchase a new primary residence will likely apply for the VA Purchase Loan or Native American Direct Loan program, if qualifying. For more direction, please consult your loan professional.
How to apply for a VA loan
When you’re ready, start your research by visiting the VA website and request a certificate of eligibility (COE). Then review finances, determine a budget, and contact one of our preferred lenders. They are standing by to offer expertise and assistance throughout the process.
VA home loans remain one of the most valuable benefits available to service members, veterans, and eligible surviving spouses, helping millions of military families achieve their dream of homeownership. Understanding your VA loan benefits is the first step toward making an informed homebuying decision.
Parlin Oaks by Blue Mountain Communities also honors your service with our Local Leaders program, offering eligible military members and veterans $2,500 towards personalizing their new home with custom cabinets, flooring, or countertops. Please contact your Sales Professional at Parlin Oaks for details.