Did you know that if you are currently in the military or are a military veteran, you may be eligible to join the VA Loan Program?
VA Loans are one of the best benefits programs available to almost all veterans – and one of the best kept secrets!
In this guide, you will learn all the steps to qualify, apply for and take advantage of a VA home loan.
Guide to VA Loans
Best lendersWhat is it? Benefits Eligibility and financingApplyQualifyRefinance
10 Best VA Loan Lenders for 2022
Something you should know is that a VA loan is not offered by the Department of Veteran Affairs, but by lenders backed by the VA.
Here are some of the best VA loan providers right now:
We recommend that you contact one of these 10 lenders that specialize in providing VA loans. The process will be smoother than with a local bank that may only issue 1 or 2 of these mortgage types per year.
They are generally better able to answer your questions, get the right paperwork on time, and coordinate the requirements of a VA loan.
You can contact one of our trusted partners for more information about VA Loans, such as:
Or there are companies like VAloans.com, which compare the country’s most trusted VA lenders side by side, reducing the footwork on your end.
Use the chart to directly request a VA loan or Streamline refinancing from one of our trusted partners.
Exploring VA loans for the first time? Let’s start at the beginning.
What is a VA loan?
The VA Loan Program is a long-standing program offered by the federal government to military families.
Here’s a quick look at its origins.
History of VA Loans
The VA Loan Guaranty Program was established more than 65 years ago to honor the service and sacrifice of the country’s military members.
The VA Home Loan Program was created to boost homeownership among a deserving demographic that has at times struggled to find financial stability — current military members and veterans of the United States Armed Forces.
Since the end of World War II, the U.S. Department of Veterans Affairs has helped more than 18 million veterans and their families become homeowners.
How VA Loans Work
A VA loan is a home loan that is guaranteed by the Department of Veterans Affairs and can be used to purchase or refinance a home.
VA loans come with a U.S. government guarantee.
The VA agrees to pay back about one-fourth of a borrower’s mortgage if he or she defaults.
This limit on potential losses from a VA loan gives lenders a higher degree of confidence, which in turn can typically offer qualified borrowers excellent mortgages and loan terms.
This would be similar to a USDA loan, FHA loan, or other subsidized alternatives to VA loans.
Benefits of VA Loans
Full financing
The most popular of all the VA loan benefits is without a doubt that a VA loan does not require a down payment.
In fact, in recent years, VA loans are the only true mortgages that offer 100% financing.
With a VA loan, both active duty members and eligible veterans are allowed to buy a home with virtually no cash.
You can even refinance a VA loan up to 100% of the appraised value of your current home.
If this describes your situation, a VA loan is the perfect financing option for you.
But that’s not the only benefit of VA loans.
Flexibility
VA loans can be used just like other types of mortgages.
Depending on the type of VA loan you choose, they can be used to purchase or refinance a single-family home or a VA-approved condominium.
They can even be used to buy a ranch home or a multi-family home (up to a 4-plex).
But VA loans also have several advantages over other types of mortgages.
All this, and you may still be able to get some of the best VA loan rates on the market that other banks can’t match!
Payment for closing costs
VA loans allow real estate sellers to pay up to 4% of a home’s purchase price before closing costs.
In contrast, conventional mortgages allow only 3% seller-paid closing costs for properties purchased with a down payment of less than 20%.
This is another example of how VA loans save veterans money up front for home purchases when much-needed cash comes in handy.
No PMI
Private mortgage insurance, or PMI, is another unique advantage of VA loans. Like FHA mortgages, VA loans require a mortgage insurance premium up front.
This is called the VA Loan financing fee. But that can be added to your VA loan amount and financed over the term of the mortgage.
Most importantly, unlike FHA mortgages or conventional mortgages, VA loans do not require monthly PMI premiums.
Those premiums can be significant, making it more difficult to qualify for a loan or manage a home payment.
But with the VA loan, no monthly PMI is required.
It is also generally easier for a veteran to qualify for a VA loan based on income and credit than a conventional mortgage.
VA Loans Eligibility and Financing
Eligibility for a VA loan is limited to veterans only. There is a misconception that VA loans are provided by the Veterans Administration.
But in fact the loans are provided by private lenders and only insured by the VA.
In the event of a default, the house is sold to allow the lender to recover the remaining balance of the mortgage.
But if the proceeds from the sale are insufficient to pay the remaining loan balance, the VA pays up to 25% of the loan amount.
It is this VA insurance coverage that encourages lenders to make loans to veterans.
In most parts of the country, VA loans are available up to $647,2000, as of 2022, and even more in high-end areas – up to $970,800 for a single-family home.
To qualify for a VA loan, you must meet one or more of the following criteria:
You have served at least 90 consecutive days of active duty in wartime You have served at least 181 days on active duty in peacetime You have served at least six years with the National Guard or the Reserves You are the spouse of a soldier who died in the line from work, or due to a service-related disability
How to apply for a VA loan?
Applying for a VA loan may seem complicated, but it is no more than with any other mortgage.
Usually you do not have to deal with the Veterans Administration itself, but with the mortgage lender, which can be both an advantage and a disadvantage.
In addition to completing the application paperwork, you will be required to submit certain documents such as recent pay stubs, W-2s, and bank statements.
You will also need to obtain your VA Certificate of Eligibility, but the mortgage lender can usually help you with this process.
You must provide a copy of your discharge papers showing that you have been honorably discharged, or a copy of your DD214.
How do you qualify for a VA loan?
Once you have your certificate of eligibility, it’s just a matter of qualifying for the VA loan.
Qualifying for a VA loan is similar to how you would qualify for any other type of mortgage, but it can be even easier because the loan comes with the VA’s guarantee.
It is essential to understand beforehand that having a certificate of eligibility does not guarantee loan approval.
It just means that you are eligible to participate in the VA loan or rehab loan program. You must qualify based on:
your credit your job your income and your total debt level
Active military personnel are eligible for VA loans based on their service-related income, while those who want to buy a home after military separation are off their retirement or civilian income.
VA loans use what is known as a residual income method.
It subtracts your living expenses from your income — including your new home payment — and requires a residual income amount.
Refinancing with a VA Loan
Refinancing with a VA loan can be even more rewarding than conventional or FHA financing.
You choose a VA loan to refinance to lower your interest and/or monthly costs, but you can also do a cash-out refinancing.
One of the great benefits of a payout refinancing using a VA loan is the potential to borrow 100% of your home’s value, up to the maximum loan amount in your area (again, usually up to $647.200).
You apply for a refinancing just like you would for a purchase, but the loan amount is based on the value of your property.
By doing what is known as an IRRRL, you can avoid many of the qualifying hurdles required in a typical refinancing.
You could potentially save hundreds of dollars a month by refinancing your VA loan, and tens of thousands of dollars over the course of your loan.
Thank you for your service!
Equal housing options. The Department of Veterans Affairs affirmatively administers the VA Home Loan Program by ensuring that all veterans have an equal opportunity to purchase homes with VA assistance. Federal law requires all participants in the VA Home Loan Program—builders, brokers, and lenders who list homes for sale with VA financing—to adhere to Fair Housing Laws and not discriminate based on race, color, religion, gender disability, family status or national origin of the Veteran.
This post VA Loans – Best Lenders, Benefits & Eligibility 2022
was original published at “https://themilitarywallet.com/va-loans/”
