With incredibly low rates and minimum credit score requirement of 620, VA loans are one of the best loan programs in the mortgage market. And with recent expansion to more veterans than ever, you might be surprised how easy it is to qualify and be approved for your home loan.
If you’re an active duty service member or a military veteran looking for a great deal on a home loan, you owe it to yourself to look into today’s VA loan. The VA loan program is designed to be simple, but it takes an experienced mortgage team to help you streamline the process. If you’re wondering if a VA loan might be right for you? Here are the basics you need to know about VA Loans.
What is a VA Loan?
VA loans are guaranteed by the US government and available to qualifying US service men, women and their surviving spouses. VA loans offer:
- 0% down up to $Unlimited Loan Amount – As of 1/1/2020 VA has No Limit – Contact us for details
- Low rates – typically .5% below a conventional mortgage rate
- No private mortgage insurance premium
- 620 minimum credit score
Compare this to most conventional loans that require up to 20% down payment or charge high mortgage insurance, or require you to pay discount points to get a comparable rate. VA loans are your country’s way of saying thank you for your service. The goal is to keep your monthly payment as low as possible.
Who’s eligible for a VA loan?
If you served in any branch of the US armed forces (including Coast Guard, Reserve and National Guard) between 1940 to the present day and were discharged honorably, you are probably eligible for a VA loan. Being an eligible veteran varies depending on your date of entry into service, the VA benefits offered at that time and the terms of your separation:
|Status||Service Era||Qualifying Service Dates||Minimum Service Criteria|
|Veteran||Post-WWII||7/26/1947 – 6/26/1950||181 continuous days of service|
|Korean War||6/27/1950 – 1/31/1955||90 total days of service|
|Post-Korean War||2/1/1955 – 8/4/1964||181 continuous days of service|
|Vietnam War||8/5/1964 – 5/7/75||90 total days of service|
|Post-Vietnam||5/8/1975 – 9/7/1980||181 continuous days of service|
|24 Month Rule||9/8/1980 – 8/1/1990||(10/17/1980 for officers) 24 continuous months, OR the full period you were called to active duty (minimum 181 days)|
|Gulf War||8/2/90 – present||24 continuous months, OR the full period you were called to active duty (minimum 90 days)|
|Currently On Active Duty||Any||Any||90 continuous days|
|National Guard & Reserve Member||Gulf War||8/2/1990 – Present||90 days of active service|
6 years in Reserves or National Guard, AND:
Others who qualify for a VA loan include:
Surviving, unmarried spouses of veterans who died or became totally disabled as a result of their military service, or POW/MIA spouses.
Individuals who’ve served in the US Public Health Service, US Merchant Marines, or active cadets and midshipmen at US military academies.
What types of VA loans are available?
VA offers many different loan programs with some of the lowest rates and payment options available, including:
- 30 year fixed rate mortgage
- 15 year fixed rate mortgage
- 3/1, 5/1 adjustable rate mortgages
- Refinance – Interest Rate Reduction Refinance Loan (IRRRL)
- Refinance – Cash out
- Energy efficiency loans
What are the costs of a VA loan?
One of the major advantages of a VA loan are the reduced costs associated with these loans. Costs for a VA loan include:
- Low VA funding fee (varies by loan type and down payment amount from 0% to 3.3%)
- 0% minimum down below the VA loan limit (currently $510,400)
- No mortgage insurance premium
VA loans can save you money in other ways too.
- Up to 4% of certain closing costs can be paid by seller
- No limit on discount points that can be paid by seller
- VA buyers pay no commissions or brokerage fees
- No prepayment penalty if you pay off your loan early
How do I choose a VA lender?When choosing a lender, you need an expert who understands the process and knows how to guide you to a quick and painless closing.
Does being a VA approved lender matter?
Most private lenders don’t specialize in VA loans and don’t know the process. They simply take applications and outsource the approval process to a VA approved mortgage company. With a VA approved lender you skip the middleman and work directly with the experts. We can help you complete the entire process much more quickly, so you can close and move into your new home.
How do I qualify for a VA Loan?
Qualified veterans need a Certificate of Eligibility (COE) to verify they are eligible for a VA loan. The Mortgage Brothers team will help you get your COE online during your loan approval process. To get it, you will need to provide one of the following:
- Discharged veterans provide form DD214 showing dates of service and honorable discharge
- Active duty and retired members provide statement of service
- VA Form 180 military service records request
- Or get your COE online at the VA eBenefits portal
For more information, visit the VA website, or ask an Mortgage Brothers team member.
What kind of property can I finance with a VA loan?
A VA loan can be used to finance nearly any kind of property that you intend to owner occupy, including:
- Existing or new homes
- Proposed/under construction (with appraisal/warranty)
- Approved condominium developments.
- Owner occupied multifamily (up to 4 units).
Can I refinance with a VA loan?
Yes! Many times people think that VA loans are for initial purchase only, but in fact, veterans that qualify can also refinance using a VA loan, called an Interest Rate Reduction Refinance Loan or IRRRL. You can also refinance from a non-VA to a VA loan, or to get cash for home improvement, college or paying off debt.
Can I use my VA loan to buy high-end property?
YES! Many VA buyers don’t realize that VA jumbo loans are available for qualified veterans who don’t want to be limited to the VA zero down limit. VA loans allow you to purchase properties over the zero down limit simply by making a down payment on any purchase amount in excess of the limit. So for example, if you want to buy a home for $600,000 but the zero down limit is $453,100, you pay zero down on everything up to the VA limit, and make a 20% down payment on the difference of $175,900. It’s a great and little known benefit for veterans who qualify!
What are the benefits of a VA loan?
VA loans are one of the best kept secrets in the mortgage lending industry. Not only do they offer a low rate and a minimal down payment, there are many other benefits as well. With a VA loan you can:
- Reduce down payment to 0% with no PMI
- Buy with imperfect credit – No VA minimum score
- Minimize your closing costs, seller can pay up to 4%
- Refinance or do energy saving upgrades
- Purchase and upgrade or rehab a property
- Prepay your loan with no penalty
- Buy a jumbo home with minimal down payment
- Allow another veteran to assume your loan (with VA/lender approval)
Can I take cash out of my home with a VA loan?
Yes, veterans can take cash out of their home up to 100% of their homes value. This would be done using a standard VA refinance and ordering an appraisal to determine the value of the home.
If I have a VA loan currently in use, can I get another VA home loan with 0% down?
Yes, even if you currently have a VA home loan on a property you own, you may be eligible for another VA home loan with 0%. The factors that determine if you are eligible for 2nd VA home loan are:
- The County you are going to purchase or refinance the home in
- The VA Entitlement that is currently in use, as determined by updating a Certificate of Eligibility
Call the Mortgage Brothers Team today to learn more about whether a VA loan is right for you!
New VA Funding Fee Chart effective January 1, 2020
|Type of Loan||Down Payment||Funding Fee % First Time Use||Funding Fee % Subsequent Use|
|VA Cash Out Refinance||N/A||2.3%||3.6%|
|IRRRL Streamline Refinance||N/A||.50%||.50%|