Are you thinking of buying a home? If you are a military service member or veteran, you may be eligible for a VA loan. The great news is that many of the perks of this loan are unmatched by any other home loan option! Here is what you need to know about VA loans:
What is a VA loan?
A VA loan is a mortgage loan for service members that are guaranteed by the U.S. Department of Veterans Affairs. Its main purpose is to help Veterans finance their home purchase with favorable loan terms.
Who is eligible for a VA, and what are the requirements?
To be eligible for a VA loan, you must meet certain income and credit requirements (similar to other loan programs) and have a valid certificate of eligibility (COE). While the length of service, duty status, and conduct can also affect your eligibility for a VA loan, you may be able to obtain a certificate of eligibility if you belong to any of the categories below:
- Active duty service member.
- National Guard member.
- Reserve member.
- Surviving spouse.
You can get more information from the government’s website, but the basic requirements include:
VA loans are government-insured: The U.S. Department of Veterans Affairs guarantees a portion of the loan will be paid back to the lender if the homeowner defaults. Government backing gives lenders the confidence to extend financing with great rates and terms.
No down payment is required: Probably the biggest advantage of a VA loan is that qualified buyers can usually finance 100% of their primary home’s sale price. Almost all other loan options require at least some down payment.
There is no private mortgage insurance(PMI): With most conventional loans, you are required to pay mortgage insurance if you don’t put down at least 20%. But, that is not the case with a VA loan.
A VA loan is more forgiving with credit scores: Since the VA backing reduces a lender’s risk, they can be more flexible with their terms, such as credit score minimums. The minimum will vary from lender to lender.
VA loans must be used for your primary residence: Another thing you may want to know about a VA loan is that it can only be used for your primary residence, where you plan to spend the majority of your time. All that means is that you can’t use your VA eligibility to buy a secondary residence, like a vacation home.
In the end, the VA loan program can be a big help to those who are looking to realize their dream of homeownership. We can help guide you through the process. Schedule a consultation online with us or give us a call at (916) 846-9479.
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