I’m looking to purchase a home using a VA loan. What do I need to know?
Veterans Affairs (VA) loans are one of the most significant financial benefits the U.S. government offers military veterans. These loans might be confusing and you might have some questions. So, here are answers to the most commonly asked questions about VA loans. These tips will help you to know what you need to know about VA loans.
What are the benefits of a VA loan?
First, VA loans offer 100 percent financing to qualifying home buyers. This financing means you will not be required to make a down payment when you purchase your home through a VA loan. Second, a VA loan allows you to buy a home without paying for private mortgage insurance (PMI) on your mortgage. Other benefits include limited closing costs, lower interest rates, relaxed credit standards, and the absence of a prepayment penalty.
How do I begin the application process for a VA loan?
To qualify for a VA loan, you’ll need a Certificate of Eligibility or a COE. For that, you’ll need to meet ONE of the following service requirements:
- 181 days of service during peacetime
- 90 days of service during wartime
- Six years of service in the Reserves or National Guard
- Surviving spouses of service members who have died in the line of duty may be eligible for a COE as well.
You can ask your lender to help you obtain a COE. You can also apply online through the eBenefits portal or mail a completed application form to the address listed on the way.
Does a COE guarantee approval for a VA loan?
Obtaining a COE does not guarantee you will receive a VA loan. Disqualifications happen for other reasons, including being discharged from service under dishonorable conditions, having defaulted on a past VA loan, or trying to purchase property that does not meet VA loan requirements.
Will a VA loan cover a mortgage of any size?
For years, VA loans have had strict maximums that varied by county. Veterans were permitted to take out higher loans but were required to make a down payment on them.
Effective Jan. 1, 2020, these limits are no longer in play for most VA borrowers. Qualifying veterans can now purchase more expensive homes without making a down payment.
VA loan limits are still in effect for veterans who have one or more existing VA loans open, or who have defaulted on a VA loan in the past.
Are there any hidden fees associated with a VA loan?
The only fee unique to VA loans is the funding fee. This fee varies by loan size and increases with each subsequent VA loan you open. For veterans purchasing their first home through a VA loan, the funding fee is 2.3 percent of the loan. You can roll the cost of the fee into your mortgage or pay it upfront.
With these tips, you are on your way to what you need to know about VA loans. We are here if you need us. We offer Mortgages, refinancing, and HELOC loans. Visit our site, call, text, or stop by one of our branches.
