Since 1944, the VA home loan has supported many of our country’s bravest individuals in achieving their dream of homeownership. Geared towards active-duty personnel, veterans, eligible surviving spouses, and specific National Guard and Reserve members, the VA loan is a versatile option that allows us to give back to those serving our nation.
With competitive interest rates and zero down payments, VA home loans aim to simplify the home buying process for qualifying individuals. Furthermore, VA loans provide reduced closing costs, no private mortgage insurance obligations, and no penalties for prepayment, making them an excellent choice for your home purchasing needs.
The VA home loan has made homeownership attainable for millions of active duty and veteran service members through relaxed credit criteria and qualifications.
Unique Benefits of a VA Home Loan
There are many aspects to the VA home loan that make it unique compared to a conventional loan.
No Downpayment Minimum
One unique aspect of the VA loan program is the option for an induvial to purchase with home with no down payment requirement. Unlike with a conventional loan, a prospect homebuyer does not need to worry about meeting a 20% downpayment to avoid private mortgage insurance, because it is not required.
No Private Mortgage Insurance (PMI) Requirements
For prospect homebuyers working on a budget, private mortgage insurance or PMI requirements can be an extra expense in their monthly loan payments and can impact how much house they can afford. However, with a VA home loan, there are no private mortgage insurance requirements even if you put less than 20% down on your home. This allows for no additional PMI costs adding to your monthly mortgage payments and can save you money over the life of your loan.
Competitive Interest Rates
Another great feature of this program is the competitive interest rate on VA loans, offering great value to our homebuyers. There are multiple factors that weigh in on the competitive interest rate options, including government support, which allows lenders such as Keller Home Loans to lend without needing to worry about defaulting.
Cash Out Refinance
In addition to a home purchase, VA loans also offer the ability to apply for a cash-out refinance. This allows the individual to tap into their home’s equity. This is a great option for individuals looking to renovate their home to better suit their needs, consolidate debt, or pay for unexpected expenses.
VA Streamlined Refinance (VA IRRL)
Another option available for VA eligible individuals looking to refinance their VA loan is the VA streamlined Refinance (or VA IRRL). This program allows the borrower to apply with fewer document requirements and a simplified fee structure compared to a traditional refinance. Also included is minimalized closing costs and a faster approval process, making it a great option if you are looking to refinance your VA loan.
Understanding Closing Costs and Funding Fees
One myth about VA loans that is often discussed is whether their closing costs are higher compared to a conventional loan. While this is not true, it is important to note that there is a mandatory funding fee on all VA mortgages (unless the borrowing veteran has a VA related disability, then the funding fee is waived).
The funding fee is typically paid at the time of closing; however, the option to finance the funding fee into your loan total is also available. The funding fee total will depend on what percent you put down as well as whether you’re a first-time homebuyer.
Below is the table for funding fees:
|Type of Loan||Down Payment||Percentage for First Time Use||Percentage for Subsequent Use|
|5.0 – 9.99%||1.50%||1.50%|
|10% or more||1.25%||1.25%|
|Cash-Out Refinance Loans||N/A||2.15%||3.30%|
Additionally, one of our VA loan officers would be happy to provide you with a custom loan quote and pricing options.
Have More Questions?
If you’re serving or have served in the military and are looking to purchase a home, a VA loan could be an incredible benefit for you to consider. If you have any questions, feel free to contact a Keller Home Loans loan officer to determine your VA eligibility. Give us a call today at 1-800-24-RATES (1-800-247-2837).