Benefits of a VA Loan
Here’s what the VA Loan program has to offer our veterans and their families:
Little-to-no down payment required
For eligible veterans, VA Loans do not require a down payment. You may obtain up to 103.3% financing for a home purchase or 20% for a second mortgage and up to $6,000 for energy efficient improvements. For a refinance with a new VA Loan, veterans may borrow up to 100.5% of the loan amount.
No money due at closing
Yes, it’s possible. The VA limits closing costs for veterans. Sellers are allowed to pay most or all of those expenses for the borrower. So, you can come to the table without a large lump sum payment.
No monthly PMI (private mortgage insurance) = Higher loan amounts
Since the VA Loan is a government-backed loan, banks can offer them without the usually required Private Mortgage Insurance. This means more of your mortgage payment can go toward qualifying for your loan amount. And, this allows for larger loans with the same payment.
Finance your funding fee
For VA purchase loans, there is a funding fee (up to 3.3%), but it can be rolled into the overall loan amount. The reason for the VA funding fee is simply this: To ensure this important program continues for future generations of military personnel and their families who wish to purchase homes. This fee goes directly to the VA for this purpose. The fee does not apply for veterans with service-connected disabilities. To refinance with a new VA Loan, there is a 0.5% VA funding fee for an Interest Rate Reduction Refinance Loan (IRRRL).
Since VA Loans are government-backed, lenders view these loans as safer options for homeowners. Lenders are then able to offer more competitive interest rates than other traditional types of loan programs.
Easier to qualify
Once again, since this is a government loan, lenders have less risk associated with these loans and have fewer restrictions and qualifications. That makes this an easier loan for veterans to obtain.