VA Loans Help Veterans Buy the Home of Their Dreams

Veterans and those who are active in the military have proven to display exceptional bravery and sacrifice. It is because of them that every day civilians can feel safe and live their own American Dream. For active-duty service personnel, veterans, National Guard members, and select Reservists interested in owning a new home, Veteran Affairs offers them loans to be able to turn this dream into a reality.

What Are the Benefits of a VA Loan?

No Down Payment Required

One of the most exciting and valuable benefits of a VA Loan is that there is no down payment required. For civilians, a 20% down payment is often encouraged and this can become a roadblock for some. A VA Loan, however, is designed to free veterans and their families of the burden of a down payment, allowing them the funds to be able to spend on a larger home, furnishings, education, or whatever fits their needs.

Keep in mind that although there is no down payment required with a VA Loan, some closing costs must still be paid.

Loan Requirements Are More Relaxed

Credit scores are often a prominent aspect of the loan approval process, especially when purchasing a new home. Another attractive benefit for veterans and their families applying for a VA Loan is that the qualifying credit score can be lower than for a conventional loan. While civilians usually require a 650-700 minimum credit score for conventional loan approval, VA Loans accept scores around 620. Plus, this figure is used as a loose guideline as each situation is handled on a case-by-case basis, taking into account the veteran’s entire loan profile.

Mortgage Insurance is Waived

For civilians with conventional loans, private mortgage insurance (PMI) is required when there is a down payment of less than 20%. This can amount to a couple of hundred dollars or more, taking a big bite out of what the homebuyer can truly afford. This can impact the size, quality, and neighborhood that the homebuyer moves into. With a VA Loan, the PMI is waived, saving the veteran homebuyer hundreds of dollars a month, putting them in a better position to fund the housing they desire.

While the mortgage insurance is waived with a VA Loan, Veterans Affairs must still cover the few losses that go into default. A ‘funding fee’ is applied to each purchase loan and home buyers have the option of paying it all at once or rolling it into their monthly mortgage payment.

Closing Costs are Limited

Veterans buying a home with a VA Loan can finance their closing costs into their loan. This allows them to be able to pay less out of pocket.

Veterans are allowed to pay for various closing costs such as:

• Credit report
• Recording fee
• Origination fee
• Appraisal
• Title insurance
• Survey

There are other fees that veterans are not asked to pay, and lenders must charge no more than 1% to cover the underwriting and originating costs of the loan.

Appraisal Support 

Homebuyers often encounter the situation when the appraised value of the home they are interested in buying does not match its purchase price. It’s at this time that a VA appraiser will be asked to take additional information into account before making their final determination.

This information may include an itemized list of various upgrades and improvements that have been made over the past few years that the appraiser may not have had prior knowledge about, giving the veteran the advantage of a longer, more detailed appraisal process.

VA Loans are geared toward helping our service men and women turn their dreams of buying a new home into substantive reality. Blue Mountain Communities preferred lenders have all the details and information to help you learn more about mortgage options and choose the best fit for you.