After all they have done to serve our country, veterans deserve some service in return. VA loans were created to serve those who have served. Flexible and financially beneficial, VA loans turn houses into homes for veterans across the country.
The program offers huge benefits to eligible veterans. The loans are backed by the Department of Veterans Affairs, so approved VA loan lenders have much more flexibility when preparing their loans. The biggest advantage that stems from this is that there are no down payments. The loan limit is $417,000 for most parts of the country (higher in more expensive areas), which means veterans can buy a home of that price without putting down a single dollar.
With VA loans, veterans enjoy lower monthly payments as well. This saves borrowers substantial amounts of money. Other VA loan benefits include:
- Private mortgage insurance (PMI) is not required
- Loan interest rates are generally .5%-1% lower than those of conventional loans
- Sellers can pay up to 6 percent of closing costs and concessions
- Borrowers face no penalties for prepaying on their loans
VA loans are open only to certain veterans, however. To be eligible for a VA loan, you must have done one of the following:
- Served 181 days during peacetime
- Served 3 months during wartime
- Served 6 years in the Reserves or National Guard
- Be the spouse of someone who died in service
Overall, the lending rules and qualification measures are much more lenient than conventional loans simply because VA loans are backed by the government. This allows veterans with lower credit and higher debt to income ratio to still qualify for loans. 8 out of 10 VA loan borrowers could not have qualified for a conventional loan, demonstrating how much VA loans really do help veterans.
Once you qualify and have your certificate of eligibility, what can you use your VA loan for? You can use it to buy, build, repair, refinance, alter, or improve a home. You can also use it to refinance certain existing loans (VA-guaranteed or direct) or buy a farm residence. As long as the loan is used towards your primary residence and you do not use it to buy land or investment properties, you are good to go.
VA loans are clearly meant to help veterans become homeowners. Every veteran deserves to have a home to call their own, and VA loans are there to help this become a reality.