A VA Loan is a loan that is specifically designed for veterans or military personnel. VA Loans make it easier for military personnel to either buy or refinance a new home. The loans are easier to qualify for and are backed by the United States Department of Veteran Affairs.
A VA loan is more attractive for veterans because they are much more flexible than other conventional loans. There is no down payment or mortgage insurance necessary which makes these loans very desirable.
Benefits of VA Loans
VA loans are also advantageous for veterans because there are lower closing costs and they are much easier to qualify for when compared to conventional loans.
Even though the funds don’t come directly from the VA, the VA will guarantee about 25% of the total loan from a bank. Therefore, interest rates tend to be lower and there isn’t any private mortgage insurance required.
The VA does put a limit on the closing costs that the buyer is required to pay, which makes it more affordable than other loans. You can pay off your VA loan early with no fear of getting hit with any prepayment penalties. VA loans also offer many different refinance options and there is no appraisal required.
If you are a veteran and are looking to purchase your first home or refinance another home, a VA loan can be very beneficial with many significant savings.
VA loans Qualifications Today
Just as with any loan, there are a few things to keep in mind that can help veterans qualify for a VA Loan:
Certificate of Eligibility
In order to qualify for a VA loan, the following is required: having enough income, a healthy credit score, as well as securing a Certificate of Eligibility.
Qualifications for the certificate are usually offered to those serving in the armed forces, their spouses, and retired military veterans. Make sure to have your Certificate of Eligibility approved before applying for a loan.
Credit Score
Not unlike other conventional loans, veterans must know their credit history to apply for a loan. VA lenders usually look for a credit score around 620, which is actually a lot lower than most other loans. Of course, a higher credit ranking can also help you get a lower interest rate.
Only Use A VA Loan for Your Primary Residence
The VA prefers that veterans and current military personnel use their loans only for buying or refinancing a primary residence. A single-family home, a condominium, or even an apartment building (but you need to live in one of the units) can be used as the primary residence.
Stable Income is Necessary
Lenders for VA loans need to see reliable, stable income. There is a standard debt to income ratio to qualify for a VA loan, which is essentially the amount of money you have each month after paying the bulk of your major expenses.
The typical debt-to-income requirement that most VA lenders require is around 41%.
VA loans are a great option for members of the military and like any loan, there are many different companies that offer VA loans. It’s important to look for a lender that has experience with VA loans to get the best price and the most out of it.
This BLOG was posted by Outreach Specialists of Consumer Advocate. You can learn more about Consumer Advocate at www.consumeradvocate.org . Thank you to Consumer Advocate for their input and guidance in the posting of this BLOG.
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