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Well Known And Trusted Services Since 1988
Realtor / Broker / MBA
Mark K. Hicks
BRE# 01228710 / MLO# 1821446
VA Loan Overview: Home Financing for Veterans
Category
Details
What is a VA Loan?
A VA loan is a mortgage loan program established by the U.S. Department of Veterans Affairs. It helps veterans, active-duty service members, and eligible surviving spouses buy homes with little to no down payment and no mortgage insurance. VA loans are issued by private lenders but guaranteed by the VA.
Advantages of a VA Loan
No Down Payment
VA loans allow eligible borrowers to finance 100% of the home's purchase price, meaning no down payment required.
Details
Advantage
No Mortgage Insurance
Unlike FHA or conventional loans, VA loans do not require mortgage insurance, which reduces monthly payments.
Lower Interest Rates
VA loans typically offer lower interest rates compared to conventional loans, making them more affordable in the long term.
Easier to Qualify
VA loans generally have more lenient qualifying criteria than conventional loans, making it easier for veterans to secure financing.
Higher Loan Limits
There are no prepayment penalties on VA loans, allowing you to pay off your loan early without extra fees.
No Prepayment Penalties
Once you reach 20% equity in the home, you can request removal of private mortgage insurance (PMI), unlike FHA loans where the insurance may last for the life of the loan.
VA Loan Guidelines
Details
Guideline
Credit Score
While the VA does not set a minimum credit score, lenders often require a score of 620 or higher for approval.
Down Payment Requirements
No down payment is required for most borrowers, but if the purchase price exceeds the VA loan limit, a down payment may be necessary
Debt-to-Income (DTI) Ratio
VA loans generally allow higher DTI ratios compared to conventional loans, with some lenders accepting ratios up to 41%.
Mortgage Insurance
VA loans do not require mortgage insurance, which can significantly lower monthly payments.
Property Standards
The property must meet VA minimum property requirements, which ensure the home is safe, sound, and sanitary.
Loan Limits
VA loan limits are generally higher than other government loans and are set by county limits. Limits can exceed $1 million in high-cost areas.
Primary Residence Requirement
The home must be your primary residence, not a second home or an investment property.
Funding Fee
VA loans require a funding fee, which can be rolled into the loan. The fee varies depending on military service, down payment, and loan type.
Is a VA Loan Right for You?
Best For
VA loans are ideal for veterans, active-duty military, and eligible surviving spouses who want to buy a home with no down payment and no mortgage insurance.
Main Benefits
No down payment, no mortgage insurance, lower interest rates, and higher loan limits make VA loans an attractive option for eligible individuals.
Considerations
​Borrowers must meet military service eligibility requirements, and the property must meet VA standards. The funding fee can also increase the overall loan amount.
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