Posted on: March 2, 2018
Plenty of eligible home buyers don’t know what the VA loan is, and even those that don’t know everything about it. Many veterans have questions about the VA loan, but they don’t want to have to go to a lender to get answers.
Here are answers to some of the most common VA loan questions:
Most veterans and active duty service members are eligible. However, all veterans, active duty service members and National Guard members must meet certain requirements.
To be eligible, you must have met at least one of the following:
Also, VA loans are available to the surviving spouses of military members who died in the line of duty.
For one, the VA loan is guaranteed by the VA. This is similar to FHA loans which are backed by another government organization. Conventional loans aren’t backed by anyone.
Another difference is that VA mortgage rates tend to be much lower than both FHA and conventional. In January of 2018, VA loans closed with an average rate of 4.10%, as compared to 4.36% and 4.37% for FHA and conventional, respectively.
There are loan limits associated with VA loans. Currently, loan limits range from $484,350 to $484,350, depending on the area you are buying a home.
If a home you’re looking to buy is slightly out of this range, a downpayment can help close the gap. These are the maximum amounts you can borrow, not the maximum price of the home.
While it is possible to get a loan for a higher amount, many home buyers stay within this range to avoid using a non-VA mortgage product.
Technically, you don’t have to have any minimum credit score to qualify for VA loans. However, most lenders will want to see a credit score of at least 620 before approving the mortgage. In some cases, VA home buyers can get approved with scores below 620.
One of the biggest benefits of the VA loan is that no downpayment is required. The VA guarantees the mortgage, so you can secure 100% financing. It’s also possible to finance some of the closing costs or get the upfront costs covered by the seller.
Not only is it possible for VA home buyers to avoid a down payment, but it’s a popular option as well. In January, the average down payment on a home for closed VA loans was just two percent. Down payments aren’t required, but they can save you money on your monthly payments.
Another benefit of having the VA guarantee the mortgage is that you don’t have to pay mortgage insurance. Private mortgage insurance (PMI) or mortgage insurance premiums (MIP) are required for smaller down payments on conventional and FHA loans. But no matter how much you put down on a VA loan (if anything), you won’t have additional insurance payments.
There’s no set-in-stone time limit for how long the VA loan process takes, but it does take slightly longer than other programs on average.
In January, the average VA loan closed in 50 days. By comparison, the average conventional loan closed in 46 days, and FHA in 48 days. So, for the most part, a VA loan will take slightly longer than other loan types, but not by much.
This is a common myth with many VA eligible home buyers and homeowners. If you’re eligible for the VA loan, then you’re eligible for your entire life. Plenty of home buyers end up using the VA loan more than once, mostly because it’s arguably the best loan program out there.
Pre-qualification is the first step to buying a home. The process is incredibly quick, and it can be started online.
If you’re interested in buying a home at any point in the future, then getting pre-qualified is a good idea. You can get pre-qualified even if you don’t have a house in mind, or if you haven’t even started looking. A pre-qualification will give you a better idea of how much home you can afford, so you should do this before you start shopping around.