VA Home Loans
Choose the Right Mortgage
Choosing the right mortgage option for your unique needs is key. If you or your spouse is a veteran or military member, one of the benefits available to you is a VA Loan. VA loans, or Veterans Affairs loans, are a type of mortgage loan designed to assist active-duty military members, veterans, and eligible surviving spouses in achieving homeownership. Because these loans are guaranteed by the U.S. Department of Veterans Affairs (VA), they can provide uniquely favorable terms and conditions to eligible borrowers..
To learn more about VA Loans and whether they might be the right fit for you in your journey to buy a home in Norfolk and the Hampton Roads, contact us any time and keep reading for some FAQs.
What is a VA Loan?
VA loans play a crucial role in supporting the housing needs of military members and veterans. They are guaranteed by the U.S. Department of Veteran Affairs, allowing the terms to be more favorable than conventional or even FHA loans. They can be used for both purchasing or refinancing a home, and are often the ideal solution for military members, veterans, and spouses of military members to reach their homeownership goals. Consider the VA loan to be a thank you for your service.
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Who can qualify for a VA Loan?
To qualify for a VA loan, this is what you will need to do:
- Before applying for a VA loan, eligible individuals need to obtain a Certificate of Eligibility (COE) from the VA. The COE verifies the borrower's eligibility for the VA loan program and provides information such as the individual's entitlement amount. Eligible people include:
- Veterans who meet specific service requirements.
- Active-duty service members with the requisite length of service.
- National Guard and Reserve members who meet specific criteria.
- Certain eligible surviving spouses.
- VA loans tend to be more flexible regarding credit score requirements compared to some conventional loans. While there is no minimum credit score set by the VA, individual lenders may have their own credit score criteria. It is always a good idea to boost your credit score before applying for a loan, but talk with a few lenders to see what they require.
- VA loans often consider residual income (in contrast to the income verification and tax records required for a conventional mortgage). Residual income is the money remaining after deducting monthly housing expenses, taxes, and other debts from the borrower's gross monthly income.
What are the down payment requirement for a VA Loan?
One of the most significant advantages of VA loans is the potential for eligible borrowers to purchase a home with no down payment. This can be a substantial benefit, allowing veterans and active-duty military members to conserve their savings for other purposes. You can opt to put some money down, but in most cases will be able to borrow 100% of the cost.
What is the VA Funding Fee?
While VA loans offer numerous benefits, it's important to note the presence of a funding fee. The funding fee is a one-time upfront cost that helps offset the cost of the VA loan program to taxpayers. The amount of the funding fee depends on factors such as the borrower's military category, down payment (if any), and whether it is the borrower's first VA loan. Make sure to get the details from your lender and compare your costs between lenders you are considering.
Does a VA Loan require PMI?
Other low or no down payment loan options generally require private mortgage insurance (PMI). This is an insurance premium paid until the owner has either paid 20% of the home's value or the home has increased in value enough to have 20% or more in equity. It is a means of protecting the lender when the loan is for the majority of the home's value, in the case of a borrower defaulting on the loan.
Unlike many conventional loans, VA loans typically do not require private mortgage insurance (PMI). This can result in lower monthly mortgage payments, as borrowers are not burdened with the additional cost of PMI.
Ready to learn more about buying a home in Norfolk or the Hampton Roads? We are here to help, so contact us any time.
