Unless you have enough funds to pay cash, being able to purchase a home depends on your ability to get approved for a mortgage loan. Homebuyers should look at every option, and the VA mortgage loan can be a helpful program to many buyers. How do you know if you’re eligible and whether it’s the best option for you? Read on!
What Is a VA Loan?
The U.S. Department of Veteran Affairs guarantees loans made to qualified members of the military and veterans. This program began in 1944 as a way to help veterans afford homes. VA loans are provided by private lenders just like conventional and FHA loans.
Who Is Eligible for a VA Loan?
There are numerous ways a person may be eligible for a VA loan. Some of them are:
- Active duty service members
- Veterans who served 90 consecutive days of active duty during wartime, or 181 consecutive active duty days during peacetime
- Spouses of military members killed in the line of duty or because of a service-related injury
- National Guard members with a minimum of 90 days of active service including 30 consecutive days under Title 32 orders
- Reserves with 6 years of service, or 90 days of active service including 30 consecutive days under Title 32 orders
If you don’t meet these requirements, you may still be eligible if you were discharged for:
- Hardship
- The government’s convenience (if you served a minimum of 20 months)
- Early out or reductions in force (21 months of service is required)
- Certain medical conditions
- A disability related to your military service
If you qualify for a VA loan from one of the ways listed above, the VA requires a certain amount of income left over after you’ve paid all your major expenses.
Lenders may also require:
- A minimum credit score
- An acceptable debt-to-income (DTI) ratio
What Can You Use a VA Loan for?
Once you determine your eligibility, VA loans can be used to:
- Purchase a home, condo or townhouse, whether you’re a first-time homebuyer or have owned a home before.
- Do a cash-out refinance.
- Buy a multi-unit property of up to four units, as long as you live in one of them.
- Purchase a modular, manufactured or mobile home.
What Are the Advantages of VA Loans?
There are many advantages of using a VA loan to finance your home, especially when you compare them to other loan programs. Some of the biggest benefits are:
- VA loans offer 100% financing. With VA loans, you can move forward with your purchasing plans sooner without worrying about a down payment.
- No private mortgage insurance (PMI). Most mortgages loans require PMI if the borrower doesn’t pay 20% down. PMI is added to your monthly payment and can increase it dramatically. With VA loans, you don’t have to deal with a higher mortgage payment every month because of costly PMI.
- Lower interest rates. While not always the case, many times lenders will offer lower interest rates on VA loans. This means lower monthly mortgage payments for you.
- You still get flexibility. VA loans, just like other loans, offer 15-, 20- and 30-year mortgages. They also offer fixed rates and adjustable rates. So, you aren’t losing any choices with a VA loan.
- Lower closing costs. The VA limits closing cost amounts to 1% of the mortgage, which can save you thousands of dollars on closing day.
- You can use it more than once. VA loans are available again and again to eligible people. In addition, the benefit never expires.
How Can You Get Started With Securing a VA Loan?
You’ll need a certificate of eligibility (COE) to qualify for a VA loan. Request a COE online and present it to your loan officer to start the approval process.
Contact MIG for More Information About VA Loans
VA loans are valuable tools for cost-effectively getting active military service members and veterans into a home. Deciding if a VA mortgage is right for you means weighing your entire financial picture and deciding on your budget. From there, you should talk to a lender experienced in VA loans to be sure you understand all your options.
