Advantages of a VA Home Loan for Military Members
If you are an actively serving or a veteran member of the military, there are several advantages to obtaining a VA loan to buy a home versus a traditional loan. The time you have given serving your country has earned you and your family some benefits, including an easier, more affordable path to homeownership. The market is ripe for home buying right now, so this may be the perfect time to get qualified.
There are a few key benefits and things to know when considering a VA mortgage:
- It requires no down payment: Homebuyers will typically need at least a 5 percent down payment for conventional loans or a 3.5 percent down payment for FHA financing. On a $200,000 loan, that's $10,000 for conventional borrowers and $7,000 for FHA. For many first-time homebuyers, coming up with that kind of cash up can be challenging. Being able to purchase with $0 down means VA borrowers don't have to spend years saving to scrape together a big down payment.
- It has less stringent qualifications to meet: Many first-time homebuyers might not yet have a strong credit history, which can make it more difficult to get approval for a mortgage or qualify for an affordable interest rate. Since the VA Loan is government-backed, VA Loans are easier to qualify for at competitive rates.
- It offers the buyer lower monthly payments: Since VA Loans do not require the added monthly expense of private mortgage insurance (PMI), they tend to leave more money in your pocket each month. In addition, the competitive VA Loan rates can save typical buyers thousands over the lifespan of the loan.
- You must qualify and meet specific requirements: Determine if you are eligible for the VA Home Loan benefit based on service and discharge requirements. You must apply for a Certificate of Eligibility - A (COE) verifies to the lender that you are eligible for a VA-guaranteed loan. You can obtain your COE online through the VA’s eBenefits portal – or your lender can request it on your behalf.
- The loan is provided by a bank, but backed by the VA: VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms. These include: rules that limit the amount you can be charged for closing costs, closing costs may be paid by the seller, the lender can't charge you a penalty fee if you pay the loan off early, and the VA may be able to provide you some assistance if you run into difficulty making payments. Once you have pre-qualified for your VA loan, you are ready to start shopping for a home. Look to an experienced REALTOR to provide the guidance you need to make the buying process simple and successful.
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