VA Loans

In 1944, the United State Congress launched the Veterans Affairs (VA) loan guarantee program, which authorized the US Department of Veterans’ Affairs to guarantee home loans made to veterans by qualified lending institutions.  A VA loan is a great investment tool for American veterans and certain surviving spouses purchasing owner occupied single family homes (1 to 4 units).  It allows the borrower to obtain a loan with no down payment and in many cases, no money out of pocket.  There is no private mortgage insurance and the interest rate tends to be lower than conventional loans.  There is a one time funding fee that can be wrapped into the loan.  Veterans with any percentage of service disability will have this fee waived. A surviving spouse is exempt from paying the fee as well.  Once the certificate of eligibility is obtained (we can help you with this) along with financial documents required by the lender, we can determine how much home the borrower may qualify for or if the payment the borrower has in mind meets VA qualifying standards.

Generally, those who have met one of the following may qualify for a VA loan:

• Served 181 days during peacetime (Active Duty)

• Served 90 days during war time (Active Duty)

• Served 6 years in the Reserves or National Guard

• The spouse of a service member who died while in service or from a service-connected disability

Advantages

Zero down loan with no cap on price as long as loans is affordable and sustainable

minimum credit score of 580

possible to buy more than one with VA loan

Government limits closing costs paid by veteran

Qualification guidelines are less restrictive with VA loans than conventional loans.

Allow more flexible debt-to-income ratios

more lenient with your credit score history

Seller can pay up to 4% of closing costs

Credit card debt can be reduced or paid off from closing costs

No private mortgage insurance

Low interest rates that are 30 or 15 year fixed or adjustable

Funding fee is waived with a service connected disability

Any service disability waives the disability.  Surviving spouse is exempt from funding fee

May use the loan to buy a foreclosure property, short sale, and bank owned homes

May buy a home while deployed overseas

Closing is as quick as conventional loans

The lender can’t charge you a penalty fee if you pay the loan off early.

VA may be able to provide some assistance if the borrower runs into difficulty making payments

Disadvantages

Only available to American veterans and certain surviving spouse.

VA funding fee is 2.3% for first time users and 3.6% for repeat purchases.  The funding fee is variable and lower if there is a down payment of 5% or more.

Sellers can be more hesitant to sell their home to a buyer who is financing the purchase with a VA loan due to perceived stricter conditions.

Since there is a limit to what fees can be charged to the buyer using a VA Loan, a seller could find themselves being forced to pay more at closing.

VA loans require more strict home inspections and sometimes can make it slightly harder buying a home “as is”. For example, if a seller doesn’t agree to certain repairs, a home may not be approved with a VA loan.

VA loans are one of the best loan products on the market today.  With virtually zero down out of pocket and lower costs, it's worth your time to see if you have eligibility.  Reach out to me at 253.838.8400 with any questions!