VA Loan Overview

VA Loan Overview

The VA Home Loan

The men and women who serve the military sacrifice a lot to preserve the American way. As part of the thanks that is offered to these military personnel, the Veterans Administration has created a list of services that help the veteran and active member to get the most out of their military experience. One of the programs that was just altered by the Veteran’s Benefits Act is the VA Home Loan program. This is a program that puts the dream of home ownership within reach of the men and women who choose to serve.

One of the biggest changes that the update to the Veteran’s Benefit Act that altered the VA Home Loan program was raising the maximum mortgage to $417,000. Veterans should be aware that this is more of a guideline than a rule and that they should check with their local VA authorized lender to see what the maximum amounts are for their area. For example, some parts of the state of California offer limits as high as $987,000 for a home purchase.

The criteria for getting a VA Home Loan start with meeting the initial guidelines for active or retired personnel. Active members of the Navy, Air Force, Marines and Army qualify for the program as soon as they are out of initial training and have served at least 181 days in a non-combat situation or 90 days in a combat role. Reservists and National Guard members qualify for the program after six years of duty, or if they have been injured in the line of duty prior to six years of service.

The spouses of deceased veterans are eligible for the program provided that their spouse either died in military action, or their spouse succumbed to a condition that is considered a part of their service. The VA associates can let you know whether or not you qualify for a VA Home Loan based on the type and length of your service.

One of the big attractions in getting a VA Home Loan is that a down payment is not required. With a traditional loan, a down payment of as much as 20 percent can be standard for getting approved. The lenders who approve loans with less than a 20 percent down payment will attach mortgage insurance to the borrower’s payments. A mortgage that has a value of $150,000 can see the mortgage payments raised by as much as $191 per month with mortgage insurance.

A VA Home Loan does not require a down payment and there is no mortgage insurance to worry about. This helps to lower the cost of ownership of the loan itself and that can save military personnel money. There is also an option to have the seller pay the closing costs, which would completely eliminate any up front charges for the veteran.

Many people may think that these VA Home Loans have high interest rates to offset these other great features. The truth is that the interest rates on VA Home Loans are extremely competitive. Not only that, but these special home loans can also come in one of three different formats. A veteran borrower can choose to get a loan with a traditional payment schedule, he can get the loan in a graduated format which slowly increases the payments over the first six years, or he can get a schedule that applies more money to the principle and helps the loan to get paid off faster.

The great thing about a VA Home Loan is that there are no early payment penalties. So if a veteran is able to pay his loan off early, then he will not have to pay any extra penalties that may apply to standard mortgages.

Active duty personnel can utilize their eligibility as often as they like, provided that they are only financing one property at a time and any previous properties are paid off in full. Active members can also use their eligibility to buy the home they will retire to and a home when they get deployed overseas. Retired veterans have a specific amount of eligibility that can be explained by a qualified VA home loan representative.

The VA Home Loan is not just for buying a home. It can also be used to remodel a property, buy a plot of land to build on or buy an apartment building. As long as the veteran borrower has his primary residence on the property being financed, then the purchase is eligible for a VA Home Loan.

The credit and debt ratio restrictions for a VA Home Loan are much different than for a standard loan. Veterans with a 41 percent debt ratio and a credit rating of 620 can still qualify for a VA Home Loan.

The VA authorizes lenders to execute the program and then the VA backs up each loan to give the lender a sense of security. For the veterans who are working hard just to make ends meet, this is the perfect way to get the home of their dreams. There is no down payment required and the application requirements strongly favor active and retired military personnel.