What Is a VA Loan?
A VA home loan (also known as a Department of Veterans Affairs home loan) is among the most helpful military benefits. If you qualify, you can buy or build a home, or refinance an existing home mortgage, with as little as $0 down, great rates, and financing with no mandated cap. Another benefit over conventional mortgages is that there is no PMI (Private Mortgage Insurance, the monthly insurance fee charged to protect the bank until you reach at least 20% equity).
For most service members and veterans that qualify, a VA loan is among their most valuable benefits and a no-brainer over other, traditional mortgage types. This section offers an in-depth explanation of the VA loan process and instructions on how to submit an application.
A VA loan makes home-buying much more affordable for countless veterans and active-duty members.
VA Home Loan Basics
While VA Loans are issued by private lenders they are backed by the U.S. Department of Veterans Affairs, which is why they can be provided often with little to no down payment and no PMI. Since 1944, the VA has helped over 25 million military men and women purchase homes utilizing the VA loan mortgage program, according to VA statistics.
VA Loan Eligibility
Are you eligible to receive a VA loan? If you have served on active duty for at least 90 days or met a variety of other service criteria developed for Guard and Reserve members, the answer is most likely “yes.”
VA Loan Qualifications
- Completed at least 90 days of active duty service.
- Have at least 6 years of service either in the Reserves or National Guard.
- Served a minimum of 181 days of active service during peacetime.
- Have 90 cumulative days of active service under Title 10 or Title 32. For Title 32 service, at least 30 of those days must have been consecutive.
- You’re the husband or wife of a military service member who either died in the line of duty, or as a result of a service-related disability.
VA Loan Process
Like any mortgage process, acquiring a VA home loan has a variety of important steps you have to work through before you can receive the keys to your dream home. Because the VA home loan is just the type of loan not who the loan is sourced from, the very first thing you need to do is find a VA home loan lender and get a no-obligation rate quote.
VA Home Loan vs. Conventional Home Loans
VA loans are some of the only loans remaining that offer no down payment. With traditional loans, the buyer is required to provide up to 20% down, which can sometimes make it too difficult to purchase the right kind of home for your family. Since with a VA home loan, there’s no private mortgage insurance, this can save hundreds of dollars a month over conventional loans, depending on how much you borrow. Since the VA loan is backed by the government, the rates are often much better than a traditional loan, which will save you a significant amount of money over the life of your home loan. Lastly, the VA home loan has a more lenient lending policy, allowing you to qualify for a VA loan when you might not meet all the requirements for a traditional loan.
Types of VA Loans
The VA provides a variety of loan program options, including purchase and refinances mortgages, rehab and renovation loans, and energy efficiency mortgages. Here’s an overview of the VA loan options:
- VA Purchase Loan– Enables qualified service members to purchase a home with no minimum down payment.
- VA Interest Rate Reduction Refinance Loan (IRRRL)– Replaces current VA mortgage with a VA loan to lower interest rate or to refinance from an adjustable to a fixed rate.
- VA Cash-Out Refinance– Replaces VA or conventional mortgage with a VA loan. An option to convert home equity to cash.
- VA Energy Efficient Mortgage– Finances energy efficiency home improvements.
- VA Rehab and Renovation Loan– Finances the cost of home improvements.
VA Loan Funding Fee and Other Costs
Almost every VA loan comes with a VA Funding Fee. This fee goes straight to the Department of Veterans Affairs and helps back the VA loans of the future. Not everyone needs to pay the fee, such as military men and women with a service-related disabilities. Fees vary from a little over 2% for first-time VA loan recipients, to 3.3% for repeat home buyers. The good news is you can roll this fee into your loan amount.
In addition, closing costs are less, and often the seller can pay these costs, as well.
VA Loan Limits
In the past, the VA capped the amount of money available for a VA home loan. However, as of 2020, the VA no longer mandates loan limits. That means you can buy the home you want through your VA home loan benefit.
With Mission First Capital, you can start your investment journey alongside other military members and veterans! If you have questions or would like to talk about potential partnerships or investment opportunities, don’t hesitate to reach out. Give us a call at +1 (844) 632-3863 or visit our website MissionFirstCapital.com to learn more and let’s invest today!