Getting a VA mortgage loan is one of the most powerful mortgage options available to active military homebuyers as well as veterans and surviving spouses.
What makes this program so popular for military service members? There are significant benefits to a VA loan that can’t be found with conventional mortgages.
Here’s a list of the 10 biggest benefits of a VA loan for active service members, retired, and military spouses.
What makes this program so popular for military service members? There are significant benefits to a VA loan that can’t be found with conventional mortgages.
Here’s a list of the 10 biggest benefits of a VA loan for active service members, retired, and military spouses.
No Down Payment
Without the requirement of a down payment, military service members don’t have to spend years saving money to buy a home.
This is particularly important because building credit and saving money can be difficult for service members who move frequently.
With a VA loan, qualified borrowers can finance 100% of the home’s value without needing a hefty down payment.
No Private Mortgage Insurance
Private Mortgage Insurance, or PMI, is insurance that protects the lender in case the borrower defaults on the loan.
Conventional lending requires PMI if the borrower cannot put a down payment of 20%. A challenging requirement for many homebuyers.
However, private mortgage insurance is not required for service members, allowing them to stretch their dollars further.
Interest Rates are Competitive
VA loans have had the lowest average 30-year fixed interest rates on the market for the last 6 years, according to ICE Mortgage Technology.
Generally, VA interest rates are .5% to 1% lower than conventional mortgage interest rates. This helps service members to save monthly and over the life of the loan.
Credit Requirements are Relaxed
While the Department of Veteran Affairs oversees the loan program, it does not issue loans, which means the agency doesn’t set or enforce credit score minimums.
Most VA lenders do use credit score benchmarks to assess a borrower’s default risk, but the credit score minimum for service members is usually lower than for conventional mortgages.
The credit score doesn’t have to be perfect and VA loans are more forgiving when a borrower is bouncing back from a foreclosure, short sale, or bankruptcy.
Learn more about VA loan credit score minimums here.
Most VA lenders do use credit score benchmarks to assess a borrower’s default risk, but the credit score minimum for service members is usually lower than for conventional mortgages.
The credit score doesn’t have to be perfect and VA loans are more forgiving when a borrower is bouncing back from a foreclosure, short sale, or bankruptcy.
Learn more about VA loan credit score minimums here.
Limits on Closing Costs for VA Loans
No matter where you get a mortgage loan, you’re going to pay fees and closing costs. The difference with a VA loan is that there are limits to what military service members can be charged.
Some fees must be covered by other parties. Additionally, VA loan borrowers can ask the seller to pay a portion or all of their loan-related closing costs, and up to 4% of fees like prepaid taxes and insurance, paying off judgments and collections.
Of course, there is no guarantee that a seller will fulfill any of these requests, but the military buyer can negotiate these terms with the seller.
Some fees must be covered by other parties. Additionally, VA loan borrowers can ask the seller to pay a portion or all of their loan-related closing costs, and up to 4% of fees like prepaid taxes and insurance, paying off judgments and collections.
Of course, there is no guarantee that a seller will fulfill any of these requests, but the military buyer can negotiate these terms with the seller.
Use VA Loans for a Lifetime
It’s not true that you can only use a VA loan once during your lifetime. In fact, the opposite is true.
Military service members who qualify, can use this program over and over again because this benefit never expires.
What’s more, you do not necessarily have to pay back your VA loan in full to use your benefit again.
Military service members who qualify, can use this program over and over again because this benefit never expires.
What’s more, you do not necessarily have to pay back your VA loan in full to use your benefit again.
No Prepayment Penalties
You can also pay off your home loan before it matures. There is no pre-payment penalty. As a VA home loan borrower, you can pay off your loan at any time without the worry of a pre-payment penalty.
Verifying Income
Verifying your income is part of any mortgage loan process. It’s essential for both buyer and lender to make sure the borrower can comfortably afford their new mortgage payment.
That’s why VA lenders accept multiple forms of income. Salaries and wages are the most acceptable form of income documentation, but other forms of income are also accepted such as disability pay, retirement income, and basic allowance for housing.
Additionally, hazard pay, imminent danger pay, and subsistence and clothing allowances can also be counted.
That’s why VA lenders accept multiple forms of income. Salaries and wages are the most acceptable form of income documentation, but other forms of income are also accepted such as disability pay, retirement income, and basic allowance for housing.
Additionally, hazard pay, imminent danger pay, and subsistence and clothing allowances can also be counted.
Foreclosure Avoidance
For more than a decade, VA loans have been one of the safest loans on the market. Considering that 8 out of 10 homebuyers don’t put down any money, that’s remarkable!
The reason is the VA’s residual income guidelines as well as tremendous advocacy of veterans in jeopardy, working to ensure they keep their homes.
The reason is the VA’s residual income guidelines as well as tremendous advocacy of veterans in jeopardy, working to ensure they keep their homes.
VA Appraisal
An appraisal is a necessary step for any homebuying process. It’s used to assess the property’s condition and value. This establishes an appraised value at fair market value.
It also ensures the home meets the Minimum Property Requirements (MPR) for homeownership.
Both requirements are meant to further ensure military service members buy homes that are sound, safe, and sanitary.
As a military service member, you give so much to keep our country safe. So take advantage of the benefits of the VA loan program to become a homeowner.
Be sure to include homeowner’s title insurance to further safeguard your home.
Ready to close on your new home? Turn to Lilly Title & Settlement. We’re obsessed with legal details, so you get into your new home quicker. Learn more about us here.
It also ensures the home meets the Minimum Property Requirements (MPR) for homeownership.
Both requirements are meant to further ensure military service members buy homes that are sound, safe, and sanitary.
As a military service member, you give so much to keep our country safe. So take advantage of the benefits of the VA loan program to become a homeowner.
Be sure to include homeowner’s title insurance to further safeguard your home.
Ready to close on your new home? Turn to Lilly Title & Settlement. We’re obsessed with legal details, so you get into your new home quicker. Learn more about us here.
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