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VA Loans: A Guide Explaining Veterans Home Loans

Veterans home loans are among the best benefits available to active duty and retired military servicemen and women. Designed to help Veterans achieve their dreams of homeownership, the program offers affordable options regardless of a person’s credit history or cash on hand. Because there is no down payment required or minimum credit score threshold to be met, Veterans can explore a host of options for home buying, construction and renovations.

What are the Benefits of VA Home Loans?

Affordable and flexible, VA home loans are a good option for those without the cash saved for a down payment. Typically, when buyers put down less than 20 percent, they are subject to Private Mortgage Insurance, or PMI fee. This monthly payment is not necessary for those who qualify for veteran administration loans. There are also lower interest rates available to veterans and no prepayment penalties associated with their loan.

These government-guaranteed loans are offered by private lenders for the purchase of a home. This government guaranty means that lenders are protected against loss should the Veteran fail to repay the loan. The extra layer of protection for the lender makes the process more appealing, which means lower interest rates are passed onto the buyer. This makes Veteran home loans among the most affordable options for homebuyers.

Qualifications for Veterans Home Loans

Veterans home loans are available to those who have served at least in the military for at least 90 days of wartime. For those who served during times of peace, 180 days are required. Members of the Reserves and the National Guard also qualify but must serve at least six years in order to receive such benefits. Widowed military spouses may receive these benefits if their partner was killed in the line of duty or suffered a fatal disability while on active duty.

To apply for a veteran house loan, you’ll need a Certificate of Eligibility, available through the Department of Veterans’ Affairs. Also called a COE, this document proves your eligibility for a home loan. Veterans will need a copy of their discharge papers, while active duty members will need a statement of service signed by their commander. More information about the specific documentation needed for your COE can be found on the VA website.

Once you have your COE in hand, you can search for a private lender who offers Veterans home loans. Your lender will help you secure financing for the house of your dreams. One option is SoCal VA Homes. We work with Veterans and their families to make their home buying goals a reality. Because we’re so well-versed in the VA home loan program, we’re a great resource for anyone with questions about their options.

While the VA does not set a minimum credit score requirement, individual lenders may have their own threshold to meet. If you have at least a score of at least 620, you will likely qualify for a VA home loan. Even those with a history of foreclosures or bankruptcies may be eligible for the program. Learn more about credit requirements.

Anticipating Costs

While you don’t need cash on hand for a down payment, you will be expected to pay a funding fee to the Department of Veterans Affairs. Typically ranging between 1.50% to 3.30% of the overall cost of the home when financing 100%, the fee helps to fund the home loan program and keep it running for years to come. Such fees are generally lower for those taking advantage of the Veterans home loan program for the first time. Subsequent usage of your VA loan will increase your funding fee,

Some buyers will be exempt from funding fees. Widows who have lost their spouse in the line of duty do not typically pay these fees, nor do disabled Veterans. Generally speaking, funding fees are mandatory. Be sure you are factoring them into your plans for buying a home. Our VA funding fee calculator can help you better understand how much you might owe. Some buyers opt to pay the funding fee upfront, while others opt to roll it into the cost of their mortgage.

Veterans Administration Loans

Loans for Veterans are not a one-and-done benefit.. This means you can buy your first home, pay it off and purchase a second property using your same VA benefits. The only limitation? Your purchase needs to be your primary residence.

A Veterans home loan can be the secret weapon you need to get into the house of your dreams. SoCal VA Homes is passionate about helping Veterans achieve these goals of homeownership, which is why we work tirelessly to educate, inform and guide our clients through the process of getting a VA loan. If you’re eager to start your journey to the house you’ve always wanted, call us today! (949) 268-7742


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