All About VA LoansIn 1944, the United States government created the VA home loan. The main objective, which remains today, was to assist returning service members with purchasing a home without the limitations of a down payment.
What is a VA loan?
VA loans are backed by the U.S. Department of Veteran Affairs and made by qualified lenders, such as banks or independent mortgage companies. They're designated for qualified current, retired, and reservist military members (and some surviving spouses) in recognition of their service. To be eligible, a military member must serve 90 consecutive days on active duty during a time of war, 181 days during peacetime, or 6 years in the Selected Reserve or National Guard.
What are the benefits?
VA loans often offer the most competitive terms and interest rates to borrowers since the loan is guaranteed by the Department of Affairs.
Other benefits include:
- Up to 100% financing available
- No private mortgage insurance
- More forgiving credit underwriting guidelines
- No expiration on the benefit
- No limit to the number of times you can receive a VA loan
- No early payoff penalties
Are there any fees?
There is a funding fee associated with VA loans which goes directly to Veteran Affairs to grow the program for future generations. The amount depends on the veteran's service and loan type but can range from 0.5% to 3.3% of the loan. You can finance the VA Funding Fee and wrap it into your monthly mortgage payments. As of January 1, 2020, Purple Heart recipients who are still serving on active duty are exempt from paying the funding fee.
Are there different VA loan offerings?
Policies and guidelines for VA loan offerings can vary by lender. Contact us to learn more about our available offerings.
- VA Purchase Loan: Used to purchase new or existing homes with no down payment. Can include the purchase of single-family homes, condominiums, manufactured homes, multi-unit properties or new construction.
- VA Interest Rate Reduction Refinance Loan (IRRRL): This popular loan is designed to be fast and easy. An IRRRL, or VA streamline loan, is an appealing refinance option for those looking to reduce their monthly payments or stabilize payments by moving towards a fixed interest rate. You must already have an existing VA home loan to qualify.
- VA Cash-out Refinance: Qualified homeowners can refinance a mortgage and tap into their home's equity. This loan does not require the veteran to currently hold a VA loan and homeowners are not required to take out cash. However, cash received can be invested elsewhere, such as, home improvements, contributing to college or retirement funds, or purchasing more real estate.
- VA Energy Efficient Mortgage: Borrowing additional money to pay for energy efficient improvements to a home as part of a home purchase or refinance. These improvements might include storm thermal windows or solar heating and cooling systems. This could give you up to $6,000 to cover the cost of qualified improvements.
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