Helping veterans and active-duty military access credit to buy homes is one of the biggest benefits available for the millions of men and women who have served or currently serve in the military or National Guard.
It’s one of the most important ways this country says “Thank you” for your service. And while many veterans still don’t know about or don’t bother looking into the benefits associated with VA home loans, the number of loans made every year continues to grow. For example, 631,000 loans for veteran were approved in 2015, a 44 percent increase over 2014, according to the U.S. Department of Veteran Affairs.
Veterans tend to focus on the more well-known VA benefits, such as paid college tuition and medical benefits, and forget about their VA mortgage entitlement.
Educating potential homebuyers on the options available to them can help this VA loan growth trend continue. The VA doesn’t actually lend money, but instead guarantees a percentage of the loan in the case of default. Here are a few basic facts about VA loans every past and present member of the military should know:
When are you eligible for a VA home loan?
Military members, both past and present, are eligible for a VA loan guarantee after serving 180 days in the military or 90 days during wartime. Members of the National Guard and reservists are eligible after six years of service, or 90 days if they have been called for active duty during wartime.
No down payment is required with VA loans
This is perhaps the single greatest aspect of the VA loan. Homebuyers can generally borrower up to four times their $36,000 VA loan benefit without a down payment. That means in some cases lenders will finance up to 100 percent of the purchase price thanks to the VA’s loan guarantee.
Bad credit won’t impact your interest rate
While a poor credit score can surely derail your home loan, it won’t impact the interest rate you receive through a VA loan. And loans for veterans typically come with interest rates at or below market rate for a convention mortgage.
VA home loans charge a funding fee
There is a funding fee associated with VA home loans of 1.25% to 2.4%, but this fee can be tacked on to the loan amount. The funding fee is typically higher if you take out a second VA loan.
You can use a VA loan to purchase or refinance a home
VA loans can be used both to purchase and refinance a home, but the funding fee can be expensive for some. Call us today to speak with a VA loan professional to compare loan options and see if a VA loan is right for you. It’s important to note that you’re not guarantee to receive a loan under this benefit. You must still meet minimum income and credit requirements to be approved.