What Is A Veterans Home Loan Program?

VA loan benefits

There are a lot of home loan programs in the market today. Each one of those loans aim for distinct scopes of people with unique levels of credit scores and paying competencies. Although not one is tagged supreme above the rest, there are several loans that continue to be crowd favourites because of the many perks and advantages they deliver. A good example to that is this.

A Veterans Affairs VA home loan program is one that caters specifically and exclusively to members of the Armed Forces.  This particular loan program requires a 0% down payment and does not call for a mortgage insurance to qualified borrowers. Furthermore, this loan program was birthed in the year 1944 to assist military members in buying homes without having to come up with stellar FICO scores. To this day, the Veterans Affairs home loan program has helped in funding the dream houses of more than 20 million military families.

That said, the VA home loan program type can be extended only to those who’ve lived through at least one circumstance below:

  • The borrower must have served 90 successive days or active service over wartime.
  • Borrower must have delivered 181 days of operating service over peacetime.
  • The applicant must have more than 6 years of rendered service in the National Guard or Reserves.
  • Applicant must be a spouse of a military personnel who has died over war or has died as an outcome of a service-caused disability.

No established credit score is demanded from a borrower under a VA loan. However, it certainly will not hurt if one has promising credit reports.  A VA loan is insured by the U.S. Department of Veterans Affairs (USDVA). That said, the government is not in charge of disbursing money nor are they held responsible for signing checks. They only safeguard mortgage that private banks and lending institutions grant. Because this is a government loan, more people with humble FICO ratings are eligible. That said, lenders are more exposed to greater risk should a debtor back out for whatever cause. Having said that, a debtor should still exert effort in making sure that he or she has enough paying capacity to actually compel a lender to collaborate with them.

Moving forward, VA loans are said to have lower interest rates than that of conforming and conventional loans. These loans are also assumable. One may opt to include their closing cost onto the actual mortgage to be paid for in increments.

If so many loan fees and arrangements are waived, what then does a veteran have to pay for?

Anybody who qualifies under a veteran house loan will have to pay for a VA funding fee which directly goes to the USDVA. The rate of this fee differs from one borrower to another. What sets this is  one’s qualifications. Is the debtor an active service member? Is the debtor a spouse of a military member who passed away?

However, eligible members of the armed forces who now live with a disability as a result of serving the country during war or similar occasions will no longer have to pay for the funding fee. To add, anybody who wants to acquire a cheaper funding fee can choose to fork out a down payment despite not being necessary.

In addition, maximum loanable amounts differ from county to county. A borrower can be admitted more than $400,000 to purchase a home in most areas of the U.S. In counties considered to be more expensive to inhabit, the ceiling can be pushed farther to the $600,000 bracket. If a borrower chooses to purchase a house more than what their county limit permits, a deposit will have to be shelled out.

Once one’s eligibility is clear, a Certificate of Eligibility (COE) will then be needed to proceed. Debtors may ask for assistance from their lender on how to obtain this document. Just like the VA funding fee rate, much of the paperwork involved will also be determined on how one qualifies.

Truly, this home loan program can be considered a cut above the rest. In many ways, this is a form of thank you to the military men and women who continue to preserve our country’s freedom.

by jkyle