Eligibility for a VA loan is one of the special benefits for military service members. If you're a veteran, an active-duty member, or a surviving spouse, you may be able to take advantage of this helpful mortgage program and purchase the home of your dreams. Let's discover what a VA loan is, review the main benefits, and determine if this loan program is right for you.
What is a VA Loan
A VA loan is a government-backed mortgage loan designed for US veterans, active military members, and qualifying surviving spouses. Private lenders, such as banks and credit unions, offer VA loans to assist those who have served our country.
VA Home Loan Benefits at a Glance
15-year and 30-year fixed-rate terms available
Refinance up to 100% of primary home value
No down payment
No monthly PMI
Governed by the US Department of Veterans Affairs
Jumbo loans available
Differences Between a VA Loan and a Conventional Loan
Both VA loans and conventional loans are popular mortgage financing options. However, some differences exist, especially regarding eligibility and down payment requirements. The Department of Veterans Affairs backs VA loans. They are a great option for eligible veterans and active-duty service members who want to buy a home with little or no down payment—without any PMI. This factor is enticing for borrowers who may have a limited amount of savings. However, VA loans may have stricter property requirements and could take longer to process. Conversely, conventional loans are not backed by the government and are, instead, offered by private lenders such as banks and credit unions. They are available to a broader range of borrowers, including those who have not participated in military service. Conventional loans typically require a down payment of 3% to 20%, depending on lender requirements and the borrower's credit.
Borrowers who put down less than 20% are often required to pay PMI, which can add to the overall cost of the loan. However, conventional loans may offer more flexibility in terms of property requirements and may have faster processing times.
What to Consider Before Applying for a VA Loan
There are a couple of important factors to consider before applying for a VA loan.
For example, while VA loans may be easier to qualify for than traditional loans, having a good credit score can still be significant. A higher credit score can help you qualify for a better interest rate and save you money in the long run. Plus, if you are no longer an active-duty service member, application for a VA loan does require an honorable discharge.
VA loans generally have lower interest rates and fees than traditional loans, which can result in a lower APR and more affordable home financing. However, it’s always important to consider your income and expenses before applying for any loan. Evaluate your monthly budget and ensure you can comfortably afford the monthly payments.
In addition, the property you wish to purchase must be your primary residence and meet specific requirements. It needs to be in good condition, free of any safety or environmental hazards.
Learn More About Mortgages
Now that you know more about VA home loans, it's time to find the loan that’s right for you. At The Mortgage Minds Group, we want to help you do just that.
Let us assist you in finding a better way to mortgage. Feel free to contact us about our VA home loan programs and visit our blog for more information on various mortgage-based topics like this one.
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