Did you know that if you are a Veteran, you can qualify for a VA Loan? A VA Loan is a mortgage loan guaranteed by the U.S. Department of Veterans Affairs and was created to make housing affordable for eligible U.S. veterans and members of the military.
VA home loans are available to veterans, reservists, active-duty military personnel, and surviving spouses of veterans with 100% entitlement. Eligible veterans may be able to buy a home with no down payment, refinance up to 100% of the home’s value and pay no private mortgage insurance.
These loans carry a number of benefits (such as no down payment) that make them far more appealing than conventional loans in most cases for those who qualify.
Benefits of a VA Loan
The biggest benefit of a VA loan, for many borrowers, is that there is no need for a down payment. There aren’t many loan types that don’t require a down payment, and VA is one of them. There is no need to pay Private Mortgage Insurance (PMI) or arrange for a “piggyback” mortgage to cover your down payment.
Another significant benefit of a VA home loan is the competitive interest rate. Many times with a lower down payment, the interest rate will increase. But VA loans don’t have that problem!
What Can You Do With a VA Loan?
- Specifically, a VA home loan can help veterans:
- Buy a home or residential condominium
- Build a home
- Repair, alter or improve a home
- Refinance an existing home loan
- Buy and improve a manufactured home lot
- Add energy-efficient improvements to a home
- Purchase and improve a home simultaneously with energy-efficient improvements
- Refinance an existing VA loan to reduce the interest rate
VA Loan Limits for 2019
If you want to purchase a home, condominium or manufactured home, the VA can guarantee up to the conforming loan limit of the total loan – with additional benefits such as no down payment and no private mortgage insurance (PMI). Keep in mind, your VA loan may have a funding fee depending on which benefits you qualify for.
If you are considering refinancing an existing loan, VA offers you two options. You can either refinance to reduce your current interest rate. This is also known as a “streamline loan” or “Interest Rate Reduction Refinancing Loan (IRRRL).”
Veterans also have the option to take equity out (a “cash-out” loan). You can obtain a VA cash-out loan for up to 100 percent of your home’s value.
Veterans can use a Jumbo VA loan to purchase or refinance when the loan amount exceeds the conventional loan limits. Jumbo VA loans require a down payment. The amount of the down payment is determined using a calculation that factors in the county loan limits for the area the home is in, and the portion of the amount exceeding that loan limit which the VA will guarantee.
Our expert mortgage advisors can explain the details on how much of a down payment would be based on your specific scenario. Typically, the amount of down payment required on a VA Jumbo loan will be significantly lower than what’s required on a conventional jumbo loan. VA Jumbo loans also do not require mortgage insurance, regardless of the down payment amount, whereas conventional loans with down payments less than 20% always require mortgage insurance.
Do You Qualify?
Reach out to us on The Polder Group at Summit Funding. We are here to help.