As a Veteran or active service member you are entitled to use your VA benefits to obtain a home loan. If you are eligible and qualify, the program allows for you to purchase your new home with 100% financing and no mortgage insurance. This means you will have a low fixed payment that’s affordable. All you are required to pay out of pocket are the closing costs on your new home loan. However, this is not always the case, with seller concessions (seller can pay up to 4% of your closing costs), so you can purchase your home with little or no money out of pocket. VA loans are also more flexible to qualify for compared to other home purchase loans. Once you understand the basic steps involved with getting a VA loan you will soon realize what a simple and uncomplicated process it really is to purchase your new home using your VA entitlement.
Do you want to see what kind of VA mortgage rates you qualify for?
Why a VA Mortgage Might Be Right For You
The three core advantages of taking a VA Loan is that it’s specifically tailored to meet the needs of veterans, current service members and military families with flexible terms. These Government backed loans make it possible for veterans to get some of the best financing available for purchasing a new home.
The three main areas that benefit Veterans the most are:
No Down Payment Required
No Monthly Mortgage Insurance
Competitive Interest Rates
Saving for a down payment can be extremely difficult for anyone, so not having a down payment requirement makes it easier to get into a new home.
Mortgage insurance can add 5 – 10% to the total cost of your mortgage payment when you put down less than 20% This however does not apply for VA Home Loans since the program allows for 100% of the loan to be financed. By avoiding mortgage insurance, you can save hundreds per month on your mortgage payment.
Interest rates for VA loans are extremely competitive as compared with traditional loans. Paying a lower interest rate on your loan can make a big difference not only in your monthly payment but how quickly you pay down your mortgage.
What is a VA Home Loan?
The VA helps active service members, veterans, and eligible surviving spouses to become homeowners. As part of their mission to serve you, they provide a home loan guaranty benefit and other housing related programs to help you purchase a new home. VA home loans are provided by private lenders, such as banks and mortgage companies.
The VA guarantees a portion of the loan, enabling the lender to provide you with more favorable terms. Which allows you to buy a home at a competitive interest rate without a down payment required or private mortgage insurance.
Who is Eligible for a VA Home Loan?
The length of your service commitment and/or duty status may determine your eligibility for specific VA benefits; this is discussed in our VA Home Loan eBook in detail. VA-guaranteed loans are available for your new primary residence home purchase. To be eligible, you must have a good credit score (620+), sufficient income, a valid Certificate of Eligibility (COE), and meet certain service requirements.
What is a Certificate of Eligibility (COE)?
Simply put, the certificate of eligibility or COE is issued to a veteran who has been discharged under favorable conditions and is used to prove eligibility when purchasing a home using VA benefits. Be sure to ask your licensed VA mortgage adviser for help, they obtain your COE on your behalf.
What is the DD214?
Your DD214 is your proof of military service. It shows the details of your discharge, dates of service, and current classification (retired, separated, Guard or Reserve status).Don’t worry if you’ve misplaced your DD214. You can get a free copy by visiting the official United States Government site and filling out an online form.
What is the VA Funding Fee?
The VA funding fee is collected by lenders and is required on all VA loans unless the veteran is exempt. It was established in order to offset some of the taxpayer costs associated with the VA Home Loan Guaranty Program. For regular military borrowers, the VA funding fee for purchases is a standard 2.15% for first-time VA loan use and 3.3% for subsequent use. The good news it’s not an out of pocket expense and can be financed into you your new VA loan. Your licensed mortgage advisor will let you know if you are exempt or not.
VA Loan Ready Checklist
When you set your phone meeting with your VA mortgage advisor, be prepared. Here are the documents you want handy when you have your no obligation consultation.
Pay stubs for the last 30 days or most recent leave and earning statement
W2s for the last two years for all borrowers and all employers
Most recent bank statement (all pages)
Purchase contract (If executed)
Deposit check for $400 for the VA appraiser. (Note: These fees maybe higher so always check with your Mortgage adviser)
Certificate of Eligibility (Your Lender can help obtain this on your behalf or through e-benefits)
Discharged or retired veterans need to provide a copy of DD214. Veterans still serving should provide proof of current service or current re-enlistment paperwork.
Disabled veterans may need to provide a VA disability award letter.
If you pay or receive child support, supply divorce decree and proof of timely payments.
Be sure to ask your VA mortgage adviser for the specific documents needed for your unique mortgage situation.
Once your VA mortgage advisor has the proper information in hand and you have completed the application process you will receive a very important document.
Once your VA mortgage advisor has the proper information in hand and you have completed the application, they will complete your approval and go over all the details with you. You will also receive a pre-approval letter for you to start shopping for your new home. This is a critical step since it will let sellers know you are serious and are approved to purchase their home. Your realtor will use the pre-approval to help negotiate and get you the best deal on your home.
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