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Veterans, active service members, reservists, and military spouses: Are you aware of all of the fantastic benefits of VA home loans?

VA home loans were created to give back to veterans so that buying or refinancing a home is obtainable no matter where they are in their careers.

Since these loans are VA loans, lenders are able to offer many loan options to qualified VA borrowers.

Let’s review how VA home loans work, the benefits of VA home loans, and how to apply.

How does a VA home loan work?

A VA home loan works similarly to a conventional home mortgage when purchasing your first home or refinancing.

They’re provided through private lenders, meaning these loans come with some great benefits as they’re considerably less risky for lenders.

Some of the most common VA home loans include:

  1. Purchase loan
  2. Refinance loan
  3. Construction loan

Purchasing loans are to help purchase a new home as your primary residence.

Refinancing loans can be used for your current home and have a wide range of options if you’re looking for better rates.

Construction loans help build your dream home or renovate your existing home.

VA home loans require a VA Funding Fee, but this fee is usually a small percentage of your home loan’s total costs and goes back to the VA so they can continue to offer the program for other veterans.

It’s also important to note that if you receive a monthly housing allowance, you can use it towards your monthly mortgage payments.

The top benefits of VA home loans

The most significant benefits we need to discuss include:

  1. Zero down payment
  2. Low-interest rates and better terms than conventional
  3. No PMI (private mortgage insurance)

A down payment is an upfront amount that can add up quickly. It’s a percentage of your home’s purchase price that you pay to secure the home and mortgage.

Say you would like to purchase a home for around $250,000 and are required to pay a 20% down payment. That’s $50,000 upfront before you even start making your monthly mortgage payments.

With conventional mortgages, the general guideline is that the more money you can put down, the better rates you may be offered.

With VA home loans, you could be offered little-to-no down payment, depending on the VA loan you obtain. This is a massive amount of savings that you can instead put elsewhere.

VA construction loan down payments are based on credit score and DTI.  A VA down payment can be less than the traditional 20% down payment.

Home mortgages typically have lower interest rates than other credit products, such as car loans and credit cards.

Lower interest rates and better terms are great benefits of VA home loans.

Ideally, you want your interest rates to be as low as possible, as this percentage plays a prominent role in your monthly mortgage payments.

There are ways to lower your interest rates. One of the main factors you want to look at is your credit score. With VA loans, you’re still eligible for favorable rates and terms, even if you’re working to improve your credit score.

If you want to raise your credit score before applying for a home mortgage, try to pay off any large debt and make consistent monthly payments on time.

Private mortgage insurance in itself can be costly for your monthly mortgage payments. Lenders typically require a PMI for conventional mortgages in an effort to protect lenders in the unfortunate event that a loan defaults.

One of the great benefits of VA home loans is that PMI isn’t required, saving you even more money on your monthly mortgage payments and in the long run.

VA home loans have many excellent benefits for veterans to obtain their dream homes. While the loans are the central part of the process, you want to ensure you work with a lender you trust to get you there.

How to apply

Before applying for a VA home loan, research the various loan products, homes in your area, and current housing market trends.

A great starting point is using a home mortgage calculator, which estimates how much house you can afford and how much you can expect to pay for a monthly mortgage.

While home loans will combine other factors, such as your financials and credit history, this is a valuable starting point.

It’s also helpful to check out the current housing market trends to see if it’s a sellers’ or buyers’ market and if that influences your decision to purchase.

Another way to start off on the right foot is by obtaining pre-approval. Pre-approval is when a lender reviews your financials, credit, and debt and provides an estimate of how much you may be eligible to borrow.

Not only is it a great way to make your offer stand out if it’s a seller’s market, but overall it’s beneficial as it shows sellers that you’re a credible buyer.

Typically, you can expect to provide:

  • Valid identification
  • Proof of income, W-2s, and bank statements
  • Your COE (Certificate of Eligibility)
  • Information for your credit score and debt-to-income ratio

Forge a new path forward with The Federal Savings Bank

Purchasing a home is an exciting journey and a significant milestone in life.

While buying a home is not always roses and sunshine, having a supportive, trustworthy lending team by your side always helps.

The Federal Savings Bank guarantees to provide trustworthy counsel and expertise every step of the way.  We’re a veteran-owned organization and pride ourselves on being able to give back to our veterans and communities, and empower them to reach homeownership.

Whether you’re simply looking to learn more about the benefits of VA home loans or are ready to get started, connect with us today to receive a free VA home loan quote.

Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.

This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to your individual situation.