When it’s time to buy a home as a Veteran of the United States Military, you get to use the Veteran home loan program. There are several types of VA home loans to choose from, depending on your situation. Here’s a quick look at the most common four types of Veteran Home Loans to choose from
VA Purchase Home Loan – Type of VA Loan
The most common VA loan is the purchase loan. This loan allows you to buy a home, as long as you meet the eligibility requirements. It comes with no down payment or private mortgage insurance and often has a lower rate than a conventional home loan.
Other than the requirement of being a veteran or the spouse of a veteran, you will just need to meet the credit and income requirements. The home also needs to be your primary residence. Overall, the requirements for a VA purchase home loan are very lenient.
VA Cash-Out Refinance Loan – Type of VA Loan
Another type of Veteran Home Loan is the VA Cash-Out Refinance. This type of loan allows you to use the equity in your home to get cash for remodeling, repairs or any other reason. It may come with a lower interest rate, as well.
Even if you currently have a conventional mortgage, you may be able to use a VA Cash-Out Refinance Loan to use your equity. Some lenders will only allow you to go up to 80% of the home’s value, while others may let you go all the way up to 100% of the value.
Streamlined VA Refinance – Type of VA Loan
A streamlined VA refinance loan allows you to lower your interest rate. This type of VA loan will help you if the rates are lower now than they were when you first took out the loan. It can also help lower your monthly payments and you may not have to pay any closing costs.
VA Rate-And-Term Refinance – Type of VA Loan
Another type of VA home loan is the rate-and-term refinance loan. This type of mortgage loan allows you to change the term, rate or both the term and rate of your current mortgage. It’s not used to take any cash out of the equity of the home and the loan balance will stay about the same. This loan is used to lower monthly payments by extending the term and/or lowering the interest rate.
This type of VA loan comes into play for many first-time homebuyers. After using a VA purchase loan or a conventional loan to buy a home, you may be able to use a VA rate-and-term refinance to get a lower payment. You may have started with a 30-year mortgage and five years in, you’re in a better financial place. This allows you to either shorten the term of your loan (saving you thousands over the course of the mortgage) or keep the 30-year term (lowering your monthly payment).
These are the four most common types of Veteran Home Loans. If you’re a veteran, you may want to consider using one of these home loans to save money or purchase your next home.