VA loans have many attractive benefits for borrowers.

Getty Images/iStockphoto

Are you planning to use a VA loan for your future home purchase?

They have many attractive benefits for borrowers such as 100% financing and limited financing closing costs. However, there are points to be aware of as well, such as specific eligibility requirements.

If you think you would benefit from a VA loan, start by exploring your betting options. Representatives are available 24/7 to assist you.

Here’s more about the benefits of VA loans, who qualifies and when they might be a good fit.

What is a VA loan?

A VA loan is a home loan offered by private lenders and backed by the US Department of Veterans Affairs (VA). The VA created the loan program in 1944 to help service members, veterans and surviving spouses obtain mortgages at favorable terms. It is still going strong today, offering eligible borrowers unique benefits such as no down payments, PMI requirements and limited closing costs.

Who Can Apply for a VA Loan?

First of all, to qualify for VA loans, you must be a member of the military, a veteran, or a surviving spouse. Military personnel are those who have served in the U.S. Armed Forces (Army, Coast Guard, Air Force, Navy, and Marine Corps), the Authorized Corps of Public Health Services, or the authorized corps of the National Oceanic Atmospheric Administration.

In addition, to qualify, you must:

  • Meet the minimum requirements for active duty service.
  • Have a “dishonorable” dismissal.
  • There are rights.
  • Buy a home that you intend to live in as your primary residence.
  • Meet lender and income requirements.

You can find all the eligibility details at Website of V.A. With just a few simple steps you can easily see what you’re eligible for.

Pros of VA Loans

Now that you know the basics of VA loans, what are the pros? Here’s an overview of the main benefits you should know.

No down payments

One of the most significant benefits of VA loans is that they offer 100% financing, meaning no down payment is required. Compare that to traditional mortgage programs today, which require a minimum of 3% down. While that doesn’t sound like a huge percentage, 3% of $350,000 is $10,500 out of pocket. Removing this requirement could make it much easier to afford a home.

Limited closing costs

In an effort to ensure that VA loans remain affordable for veterans and other qualified borrowers, the VA limits borrowers’ fees. For example, lenders may only charge a flat fee of 1%. Also, while borrowers can pay for a VA appraiser and VA compliance officer, they are not allowed to pay for a re-appraisal requested by the lender or seller. These and various other limits help borrowers lower closing costs.

There are no private mortgage insurance requirements

Another big advantage of VA loans is the absence of private mortgage insurance (PMI). In most cases, if a borrower puts less than 20% down on a home purchase, they are required to obtain PMI. PMI helps protect the lender if the borrower defaults on the loan.

Unfortunately, this adds significant costs to borrowers upfront and over time. For example, mortgage insurance on FHA loans will cost 1.75% of your loan amount and then 0.45% to 1.05% of the loan amount per year. On a $350,000 FHA loan, that translates to $6,125 upfront and an average of $2,625 per year ($218.75 per month). No PMI means big savings.

There is no home loan limit

Eligible eligible borrowers will not have a VA-set home loan limit. As a result, the amount will be limited to the lender of your choice how much home they decided you can afford.

Competitive interest rates

VA loans also tend to be very competitive interest rates. VA support helps reduce lending risk for lenders by allowing them to offer lower rates.

Compare rates and lenders now and start saving!

Other factors to consider

​​​​​​While VA loans are beneficial in many ways, there are other factors to consider.

Limited availability

VA loans are designed to help US military personnel and veterans. In this case, you will not qualify for a loan if you have not served or are the surviving spouse of someone who has served. In addition, you must meet a number of other requirements relating to your service.

Housing restrictions

VA loans are not suitable for all home purchases, as the VA has minimum home ownership requirements (MPR) and only offers loans for primary residences. So if you’re trying to buy a second home or investment property, a VA loan won’t work.

VA Funding Fee

Finally, while VA loans have lower costs than many other types of mortgages, they do require borrowers to pay a VA financing fee. It will currently cost you 2.15% of the loan amount if you are a military veteran taking out your first VA loan and putting 0% down. Fees can range from 1.25% to 3.3% depending on the type of veteran, the amount of your down payment, and whether you’ve taken out a VA loan before. The good news is that you can roll the fee toward the loan if you don’t want to pay it up front.

Is a VA loan right for you?

If you are a qualified military member, veteran or surviving spouse, VA loans offer an attractive home loan option. They can save on the initial and long-term costs of buying a home. You will need to meet all eligibility requirements and buy a home that you plan to occupy as your primary residence. Also, the house you buy should be in good condition.

But, if you meet the eligibility criteria, VA loan benefits are very attractive and can save you money both up front at closing and throughout the life of the loan.

If you think this is something you might be interested in, easy to learn more.