The VA Loan program is just one tangible way to say “thank you for your service,” to current and former members of the military.These unique mortgage options allow veterans and those still serving to be a part of the American dream. Veteran Affairs Home Loans are flexible, government-backed loans come with significant benefits that open the doors of homeownership to veterans who might otherwise struggle to obtain financing.
If you are a veteran, active-duty service personnel, or select Reservists or National Guard member, you are among those who can quality for VA loans. (Find specific VA Loan eligibility requirements here.) There are several benefits of of a VA loan. Here are five to consider.
1. No Down Payment
This is one of the most popular and benefits—and for good reason. Saving enough for a down payment can be one of the most challenging aspects to buying a home, but with a VA Loan you can purchase a home with zero down eliminating that roadblock.
2. More Lenient Loan Requirements
The required credit score for a VA loan can be lower than the required credit score for a conventional loan. At the time of this post, a score of 620 is required for a VA loan compared a score between 650 to 700 for most conventional loans.
Also, the required debt-to-income ratio for a VA loan is often more flexible than for conventional mortgages.
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3. No Mortgage Insurance
With a conventional loan, buyers are usually required to pay private monthly mortgage insurance unless they’re able to put down at least 20 percent, which can a challenge for many veterans. FHA Loans come with their own forms of mortgage insurance, but a VA Loan waives that insurance requirement.
Considering that private mortgage insurance typically runs around $200 a month, effectively saving you thousands of dollars over the life of your mortgage.
You should keep in mind that even though mortgage insurance is not required for a VA Loan, a funding fee is required for borrowers with the exception of those with a service-connected disability. This fee can be rolled into your monthly payments and is tax-deductible.
4. Zero Closing Cost Option
Aside from not requiring a down payment, qualified veterans can also avail of a “no closing cost” when they take a VA loan. According to the VA guideline, there are only limited types of closing costs that a VA borrower may pay which ultimately means that you will save more money with this loan type.
[clickToTweet tweet=”The VA rules limit the amount you can be charged for closing costs AND closing costs may be paid by the seller. ” quote=”The VA rules limit the amount you can be charged for closing costs AND closing costs may be paid by the seller.”]
And just because you can choose the Zero Closing Cost option, doesn’t mean you have to go this route. Veterans are allowed to pay for certain closing costs such as origination charges, credit reports, appraisal charges, title-related fees and insurance and survey fees. Home insurance and property tax, which are recurring fees, can also be paid by the borrowing veteran. For some veterans, paying the closing cost is actually a more cost effective choice.
Not sure which closing option makes the most sense for you? Let one of our loan officers go through each option with you. Contact an A1 loan officer today!
5. Competitive Interest Rates
Since the VA backs each VA Loan with a guaranty, financial institutions carry less risk and can offer interest rates that are typically 0.5 to 1 percent lower than conventional interest rates
Pair that lower interest rate with the ability to purchase a home with no money down and no private mortgage insurance and the money saved using a VA Loan can be pretty significant.
These 5 benefits are just a few of the reasons to consider a VA Loan. A1 Loan Officers are here to help our service men and women buy the home of their dreams. Give us a call at 816-822-8888 or fill out the form below.
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