Veterans, active military and surviving spouses have access to the VA Loan; a home financing option with unique money-saving benefits not found in the vast majority of other home-financing options. The flagship benefit of this program is the ability to purchase a home without the need for a down payment; however, the program also includes benefits such as:
-No monthly mortgage insurance premiums, saving you anywhere from 0.3 percent to 1.15 percent of the entire loan amount each year.
-No minimum credit requirements set by the VA; however, most lenders require a score of at least 620.
-Competitively low interest rates, made available from the Department of Veterans Affairs guaranteeing a portion of each loan.
-No penalties for paying the mortgage off early, allowing homebuyers to pay off their mortgage at a faster pace if able.
Being able to purchase a home without a down payment is something the VA took very seriously. The VA understood that veterans returning from service would be faced with the difficulty of saving up enough money for a down payment. And, with the average VA borrower having just under $7,000 in total assets, these no-money-down home loans have become a lifeline for thousands of military home buyers over the years.
For example, the minimum down payment amount on a FHA loan is 3.5 percent; for conventional financing, it’s 5 percent. On a $150,000 purchase, a military borrower would need to come up with $5,250 in cash for the FHA-backed mortgage and $7,500 for the conventional loan.
Homebuyers still must meet basic qualifications to be eligible. However, with the VA Loan program, in addition to credit and income requirements, potential applicants must meet basic service requirements.
These service requirements include only one of the following:
-The homebuyer served 90 consecutive days of service during wartime, OR
-The homebuyer served 181 days of services during peacetime, OR
-The homebuyer spent more than 6 years of service in the National Guard or Reserves OR
-The homebuyer is the spouse of a service member who died in the line of duty or as a result of a service-related disability.