Recently, we answered the Top Five Questions About Jumbo Loans. This week, we will discuss VA loans. If you or your spouse is a Veteran or serving in the military and planning to purchase a home soon, these tips will help you decide whether a VA loan is right for you.
The Veterans Affairs (VA) loan program was introduced by the Servicemen’s Readjustment Act, also known as the GI Bill of Rights. These loans are insured by the United States Department of Veteran Affairs, and were designed to provide Veterans and service members with a federally guaranteed home loan with little or no down payment, so that they and their families can take part in the American Dream of homeownership.
Veterans and active duty service members are eligible for the VA loan program. The surviving unmarried spouse of a deceased Veteran may also be eligible for a VA loan. More information about eligibility for VA loans can be found on the VA website.
VA loan limits are the amount a qualified Veteran or active duty service member with full entitlement may be able to borrow without making a down payment. How much you can borrow with a VA loan will depend on your lender and the county you are buying your home in. The basic entitlement available to each eligible Veteran or active duty service member is $36,000; lenders will typically lend up to 4 times a Veteran’s available entitlement, if the Veteran’s income and credit qualify.
VA loans will finance up to 100% of your home purchase, meaning that you may be able to purchase a home with no down payment.
Most Veterans purchasing a home with a VA loan will be required to pay a VA funding fee. The purpose of this fee is to reduce the cost of the loan to taxpayers, as the VA loan requires no down payment and often no private mortgage insurance (PMI). The amount of the funding fee depends on the loan amount, loan type, and your military category. Some VA home buyers are exempt from having to pay the VA funding fee.
VA loans offer no down payment requirement (for qualifying consumers) and often do not require PMI. Additionally, Cash Out Refinance loans allow you to take out up to 95% of the appraised value of your home as determined by VA. Some states also offer additional resources to Veteran homeowners, such as property tax reductions.
If you are a Veteran or active duty service member, you may be able to take advantage of the benefits offered by the VA loan program. For more information about VA loans, please visit the VA website. If you have more questions about buying a home with a VA loan, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!
*100% financing is available, sales price cannot exceed the appraised value. ** Veterans Affairs loans require a 1st time funding fee, which is based on various loan characteristics, your actual loan amount may be higher than the purchase price.
If you are considering purchasing a home, you may wonder what your financing options are. While there are many mortgage options available, some of the most common loan types are conventional, FHA, VA, USDA, and Jumbo loans. Over the next several weeks, we will answer the top 5 questions about the top 5 types of home loans. This week, we will discuss FHA Loans.
An FHA Loan is a type of government-insured loan offered by the Federal Housing Administration (FHA). Rather than lending money directly to home buyers, the FHA insures lenders against losses that may occur in the event that the borrower defaults on the loan. This allows lenders to offer these loans with less strict requirements than conventional or other home loans.
If you are considering an FHA loan for your home purchase, read on to learn the answers to some of the most common questions home buyers have about FHA Loans.
Anyone who does not already have an FHA loan is eligible to use this program. FHA loans are popular with low-income and first-time home buyers, due to the less stringent requirements. They have lower down payment requirements and tend toave lower credit score requirements.
The minimum down payment amount for an FHA loan is 3.5%. This is much lower than the down payment amount for a conventional loan, which is normally 20%. Additionally, FHA loans allow for down payment assistance provided as a gift by a family member, employer, or charitable organization, which other loan programs do not allow.
The credit score requirements for an FHA loan will depend on your lender. However, if you have no credit history or have just begun your credit history, an FHA loan will allow you to add a family member as a co-signer on your loan.
If you opt for an FHA loan, you will be required to pay a Mortgage Insurance Premium (MIP) in addition to your monthly mortgage payments. Mortgage insurance protects your lender from losses in the event that you default on your mortgage.
If you had a foreclosure or deed-in-lieu of a foreclosure, you may not be eligible for an FHA loan for three years after the date the title was transferred from you. However, if the circumstances of the foreclosure were out of your control, your lender may be able to grant an exception. For more information about how a foreclosure may affect your eligibility for an FHA loan, click here.
If you are still paying on a Chapter 13 bankruptcy, and your payments have been satisfactorily made and verified for at least one year, you may qualify for an FHA loan. You will need to provide written explanation of the circumstances of the bankruptcy, have re-established good credit, have stable employment, and qualify financially for the loan. If you or your spouse filed for Chapter 7 bankruptcy, at least two years must have passed since the bankruptcy discharge date. As with Chapter 13 bankruptcy, you will need to provide written explanation of the circumstances of the bankruptcy, have re-established good credit, have stable employment, and qualify financially for the loan.
An FHA loan can be a great financing option for many home buyers. If you have more questions about FHA loans, contact one of our licensed Mortgage Loan Originators. If you are ready to begin the home buying process, click here to get started!