VA mortgage loans are among the most accessible financing options available to those who have served. Active duty personnel can qualify. If you are a disabled veteran, you may qualify for additional benefits on a VA home mortgage loan. The VA Home Loan Program does not limit the number of times an eligible veteran may use the program.
VA mortgage loans extend not only to the Army, Navy, Air Force and Marines, but also to Reservists and National Guardsmen.
Some of the features of the VA Mortgage Loan Program are:
- No down payment may be required for eligible veterans with full entitlement, with no VA-imposed loan limit. Individual lenders set their own maximum loan amounts, and credit and property requirements apply
- No monthly mortgage insurance is required
- Many VA mortgage loans are assumable
- Qualifying guidelines may be more flexible than conventional loans
- VA mortgage loans can be refinanced
Note: homeowner’s (hazard) insurance is required on a VA loan, as it is on any mortgage. What a VA loan does not require is monthly mortgage insurance.
No Down Payment for Eligible Veterans
Eligible veterans with full entitlement may be able to purchase with no down payment. VA-imposed loan limits were eliminated for veterans with full entitlement effective January 1, 2020, though individual lenders set their own maximum loan amounts. If the seller agrees to pay the closing costs, you may be able to purchase the home with little or no cash out of pocket. The loan and sales contract can be structured so that the VA loan covers the selling price and the seller covers allowable closing costs. Ask us what your entitlement allows.
The VA Funding Fee
The Veterans Administration assesses a funding fee on most VA loans. The fee is generally added to the loan amount and paid over the life of the loan. The VA funding fee takes the place of the monthly mortgage insurance required on many conventional loans. Funding fee amounts and exemptions are set by the VA and depend on your entitlement, your down payment, and whether this is your first use of the benefit. If you are a disabled veteran, you may qualify for a full waiver. Confirm your figure with the VA or with us before you rely on it.
Assumable VA Mortgage Loans
VA loans are often assumable. If the person assuming the mortgage is a veteran with VA eligibility, the original veteran may not give up the entitlement used to obtain the loan. Veterans should use care and closely investigate the terms of an assumption before allowing someone to assume their mortgage — it is a significant benefit to give up.
Qualifying for a VA Mortgage Loan
The VA does not set a minimum credit score, but individual lenders do, and your credit history will be reviewed. Even if you have experienced financial difficulties that lowered your scores, a good recent payment record may still support an approval. Compared with conventional financing at lower credit scores, a VA loan can be a meaningful savings. Every application is subject to lender approval.
VA Mortgage Loans May Be Refinanced
VA mortgage loans include features that allow a loan to be refinanced to a lower interest rate with less of the documentation normally associated with a conventional refinance. This is called an Interest Rate Reduction Refinance Loan, or IRRRL. An IRRRL often requires less paperwork and may not require a new appraisal, and the costs of the transaction can generally be rolled into the loan. Individual lenders set their own credit, income and appraisal requirements, and most will review your credit.
Questions about your eligibility? Call us at (718) 943-9200.