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.