We’re wishing a Happy Birthday to the U.S. Marine Corps today and sending our Heartfelt Thanks to all Veterans tomorrow, on Veteran’s Day. Questions come up from time to time about the VA Home Loan Program, and now is probably a perfect time to take a closer look.
The VA Home Loan Program is a low cost borrowing alternative designed for eligible Active Duty Military, Veterans, National Guard and Reservists. VA Home Loans are provided by private lenders (banks, mortgage companies, etc.). The U.S. Department of Veterans Affairs (VA) guarantees a portion of the mortgage loan, which allows these lenders to offer more favorable terms to help you buy, build, repair, retain or adapt a home for your own personal occupancy.
“I hear there is extra paperwork when you do a VA mortgage loan. Why would I bother with it?”
There are a few extra documents involved in processing a VA Home Loan, such as the DD214 and your Certificate of Eligibility, but the time spent filling out a few extra questions and hunting down an extra document or two may be well worth it.
A VA Home Loan allows you to buy a house with no down payment (up to a $424,100 value), with mortgage interest rates that are typically even better than the popularly attractive “conventional mortgage” rates. And while conventional mortgages require monthly mortgage insurance payments to be added when the down payment falls below 20%, this is not true of VA Home Loans.
“I’ve heard that there is a VA Funding Fee. What is that?”
The VA Funding Fee is your contribution. It is a percentage of the loan amount. That percentage depends on the type of loan, your military category, if you are a first time or subsequent loan user, and down payment (if you choose to make one). You can pay the funding fee at settlement or choose to finance it into your mortgage if you want to keep closing costs down.
“Does everyone have to pay the VA Funding Fee?”
There are exceptions for service-connected disability. If you receive VA compensation for a service-connected disability or would be entitled to receive compensation if you didn’t receive retirement or active duty pay, the VA Funding Fee is waived. This is true as well for a surviving spouse of a Veteran who died in service or from a service-connected disability.
“Can I get help covering closing costs?”
Family members and even the home seller are allowed to help with closing costs, which is not often the case with other mortgage programs. In essence, this is a program designed to make it affordable for our veterans and active duty military to own a home.
Many people think that the VA Home Loan Program is only for purchases, or that these VA mortgage loan benefits can only be used once. Not so.
Did You Know…
- VA Home Loan benefits can be used more than once
- Disabled veterans could be eligible for additional benefits
- Eligibility benefits can be used for purchase or refinance
- You can use your VA entitlement to finance more than one property
- Adjustable and Fixed Rate Mortgages are available
- Jumbo (high dollar amount) programs are available with minimum down payment
- The Borrower has the right to pre-pay without penalty
Eligibility requirements are based on length of service or service commitment, duty status and character of services, so you’ll want to speak with a loan officer to examine your options. The good news is that with this program many of those options are extremely helpful.