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Atlanta home buyers will want to know which mortgage lending options are available. The goal is to find a home loan with the lowest possible mortgage rate and other terms that will allow you to afford their new home. In addition to the interest rate you are paying, the down payment is one of the other most important factors to consider when applying for a mortgage loan. Ready to get started? It takes less than 30 seconds to get your custom rate quote.
If you are a military veteran, active-duty service member or a surviving spouse, you may be eligible for a VA mortgage loan. VA mortgage loans are backed by the United States Department of Veterans Affairs (VA) and offer many unique benefits you won’t find with conventional loans or even other first-time home buyer programs like FHA loans.
VA Mortgage Loan Benefits
VA mortgage loans generally provide lower-than-average mortgage rates for qualified borrowers. They also offer lower mortgage interest premiums (PMI or MIP) compared to most home loan types. Perhaps the most appealing advantage of VA loans is that you can buy a home with no down payment. These loans can set you up with 100% financing on the full loan value, which may be the difference you need to afford your new home or condo in the Atlanta area.
How a Zero-Down VA Mortgage Loan Works
Qualified VA loan borrowers can get full financing, which means you can have a zero down payment. This may be very appealing for some Atlanta home buyers who qualify because of requisite military service. However, it is still a good idea to pay as high a down payment as you can afford. 100% financing is great, but it means you will be paying mortgage insurance for longer, your interest rate might be higher and your monthly mortgage payments may also be larger.
If you are able to pay anything down, you should see some benefits. You can potentially lower your mortgage rate and monthly payments. Unless you put down at least 20%, you will still be required to pay PMI (private mortgage insurance). The good news is PMI rates are usually a little lower with VA mortgage loans and it’s a fair trade-off for being able to get a home loan with a lower down payment.
VA Mortgage Rates
The down payment is just one factor that goes into determining your mortgage rate. The mortgage lender and the Department of Veterans Affairs will review your mortgage application, military records and financial documentation to confirm your eligibility. The stronger your financial health, the lower interest rate you are likely to pay. They will review your employment history and current income status. They will run your credit score (FICO score) and also calculate your DTI. That’s short for “debt-to-income” ratio. It represents the amount of your current monthly debt payments (credit cards, student loans, car loans, personal loans, etc.) against your average monthly pre-tax income.
If you have a good credit rating, consistent income and lower debt, you will be able to qualify for a lower VA mortgage rate. Don’t worry too much if you haven’t yet established a credit score. Lenders understand you may have not established credit or needed it during your military career. Your military service record can also be reviewed when determining your eligibility and ultimate mortgage rate. Then, if you are able to put anything down toward your loan, you should see further benefits when it comes to your final fixed mortgage interest rate. Of course, the higher down payment you make, the more you can potentially lower your mortgage rate. You can also ask about adjustable-rate mortgage (ARM) options.
VA Mortgage Closing Costs
Any down payment you make toward your VA loan will be due upon closing. There may also be some additional out-of-pocket closing costs such as loan origination fees, home appraisal fees and various legal/title fees. Your mortgage lender may be willing to roll some or all of these closing costs into your loan amount if you want to minimize your out-of-pocket expenses. Just remember that is adding even more principal to your mortgage loan. That will increase your monthly payments and might even affect your mortgage rate.
When it comes to closing costs and down payments, it is always best to pay as much as you can afford. This will benefit you in the long run and can reduce your monthly mortgage payments. If you are tight on cash (which is common for an active-duty service member or a veteran fresh off of military service), then a VA loan provides a great lending option for you because you aren’t required to make a down payment.
VA Mortgage Lenders in Atlanta, GA
Not all mortgage lenders or mortgage brokers in Atlanta are certified to offer VA loans. They must be licensed through the U.S. Department of Veterans Affairs. If you think you qualify for a VA loan, then make sure you are working with a mortgage provider who can help you secure this type of home loan.
Moreira Team | MortgageRight is a certified VA loan provider, and we are also authorized to offer USDA loans, FHA loans and different types of conventional loans. We can help you explore all of your mortgage lending options and find the best solution for your Atlanta home purchase or home loan refinance. Contact us today to get started.