A VA home loan is a mortgage option available to active military and veterans. Created by the U.S. government in 1944 as part of the Servicemen’s Readjustment Act (also known as the GI Bill of Rights), the VA home loan was designed to help veterans purchase homes when they borrow from mortgage lenders, even those veterans with bad credit and no money to put down. Today, the program has provided active service members, veterans, and military spouses with over 24 million loans.
VA mortgages have many advantages over regular home loans. Since many private lenders offer them and they’re backed by the government, VA loans are easy to find and relatively easy to obtain, so long as you meet a handful of basic requirements (more on that later).
Regular home loan borrowers have to deal with stricter qualifications, such as high credit scores. They also have to pay more money in the form of down payments and monthly rates. If you’re qualified for a VA loan and are thinking about buying a home, here are some of the benefits you’ll enjoy:
Like regular home loans, VA mortgages are obtained through private lenders, such as a bank or a mortgage company. Then, the loan is guaranteed by the U.S. Department of Veteran Affairs: If the borrower can’t make their payments and the loan defaults, the VA will assume the debt, not the lender. It’s important to note that VA mortgages must be conforming loans, which means they don’t exceed limits established by the Federal Housing Finance Agency (FHFA). In most counties, the limit for a conforming loan is $484,350. Though, it’s important to note that the conforming loan limit will be changing in 2020. Anything higher than the limit would be considered a jumbo loan and would not be guaranteed by VA.
Here’s some more important knowledge to have before applying for a VA loan:
In order to get a VA loan, you’ll need a certification of eligibility (COE), which can be acquired after 90 days of service during wartime or 181 days during peacetime. You’ll also be eligible if you’ve been a member of the National Guard reserve for at least six years, or if your spouse was killed in the line of duty. Once you’ve obtained your COE, you can begin the process of applying for a VA loan. From this point on, the process is similar to applying for a conventional loan. Before being approved, the lender will require access to your credit score, debt-to-income ratio, and income verification.
Interested in learning more about VA loans and how to apply? We’re here to help! Contact The Federal Savings Bank today.