As a veteran, you are entitled to use the Veteran Home Loans program. However, you may not understand this program and how it works. In fact, there are more than 21 million Veterans in the United States and only about 6% use the VA home loan program to buy houses.
If you’re an eligible veteran, you may not want to bypass this program. It’s filled with great advantages you may not understand. Here are seven of the top things veterans often don’t know about Veteran Home Loans.
Use it More than Once – Veteran Home Loans
Even if you’ve used a VA home loan in the past, you can use it again. This is not a one-and-done program, but one you can use as much as you want. Maybe you purchased a home and have outgrown it. You’re looking for something larger but didn’t know you can use a VA loan again.
You can re-use your benefit for the next home and the next one after that. Eligible Veterans and Servicepersons can re-use the benefit multiple times. You can even receive a one-time restoration if you pay off the VA loan and keep the house. .This allows you to purchase another home and you can even use this benefit for refinancing.
Surviving Spouses Could Be Eligible – Veteran Home Loans
The VA home loan program isn’t just for Veterans. If your partner has passed and you’re unmarried, you may be eligible to use the Veteran Home Loan program. Wives and husbands of Servicepersons who have been killed in action may also be eligible.
No PMI and No Down Payment – Veteran Home Loans
Did you know your Veteran home loan comes with no down payment and no need to ever pay private mortgage insurance (PMI)? This is a massive benefit you will not find with conventional or FHA loans. Other loan programs will ask for at least 3.5% down and if you don’t put 20% down, you’ll likely pay PMI.
A VA home loan can allow you to buy immediately without any down payment or PMI. If you were to put 5% down with a typical mortgage, you would pay about $150 per month for PMI on a $250K home. With your VA home loan, you don’t have to worry about PMI, which could allow you to buy a more expensive home.
No Expiration – Veteran Home Loans
Maybe it has been decades since you served our country and you think your VA home loan benefits have expired. They never expire and you can use them no matter when you decide to buy a home.
Eligibility for the Veteran Home Loan program is based on how long you served and when you served. Even those serving at least 90 days during the Vietnam era are most likely going to be eligible.
Lower Credit Accepted – Veteran Home Loans
Unlike many conventional loan programs, you can buy a home with a VA home loan with lower credit, a foreclosure or even a bankruptcy. None of these will disqualify you from buying a home. There is no minimum credit score to qualify and lenders give leniency with VA home loans.
It’s not uncommon for homeowners to struggle with bankruptcies and foreclosures due to medical emergencies, loss of income or an unforeseen event. These financial issues don’t keep you from qualifying for a VA home loan.
However, if you went through a foreclosure with a VA home loan, this may keep you from being eligible. You may need to pay back the amount owed on the foreclosure to regain your eligibility.
You can Buy a Condo – Veteran Home Loans
VA home loans are not specifically for just single-family homes. You can buy a condo, manufactured home, and even a multi-family home with up to four units. A condo could be the perfect starter home with a lower cost than a single-family home.
While the VA has a list of approved condominium communities to choose from, you can still use a VA home loan for one of the communities on the list.
Get Your VA Home Loan from a Local Lender
Local lenders will provide Veteran Home Loans, not the government. You won’t be applying with the Department of Veterans Affairs, but instead, you will be working with a private company, such as a credit union, private bank or mortgage company.
The VA does provide the insurance to the lenders known as the VA guaranty, however. You won’t be making payments to the VA, however. You will be paying the lender you work with, which means you get the VA home loan benefits while working with a local lender for better speed and convenience.
Lower Interest Rates – Veteran Home Loans
Many veterans don’t realize they can get a lower interest rate with a VA loan. Typically, the rates are about 0.25% lower, according to Ellie Mae. This is compared to conventional loans and the rates are lower due to the lower risk for lenders.
VA loans also have some of the lowest rates for foreclosure, which makes them even lower on the risk scale. It may not seem like much, but 0.25% over the course of a 30-year mortgage may amount to several thousands of dollars in savings.
No Funding Fee – Veteran Home Loans
Another way Veterans save with the VA home loan program is the waived funding fee. Typically, a VA loan will come with a funding fee of 0.50% to 3.3% of the loan amount. This helps to make the program sustainable for future Veterans.
However, you may not have to pay this funding fee. If you’re a Disabled Veteran and you receive compensation for a service-connected disability, you are exempt from this funding fee. Veterans eligible for disability compensation, but receive retirement or active duty pay, are also exempt from paying this fee.
These nine things veterans often don’t know about the Veteran Home Loan program are just the tip of the iceberg. There are several other things you may not know and it’s best to speak with a lender specializing in VA home loans before you buy a house. Using this program could save you thousands of dollars and make it much easier to buy a home now, instead of waiting until you can save a large down payment.