June 15, 2018 / Hollie Shuttlewood.
Find the Best VA Home Loans Lenders
June 15, 2018 / Hollie Shuttlewood.
VA home loans have helped more than 22 million veterans purchase their own home since the 1940s and continues to be available today through some of the nation’s best mortgage lenders.
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Many of the nation’s top mortgage lenders offer VA loans to eligible veterans and surviving spouses. As mentioned above, home buyers will need to bring a COE as proof of eligibility for a VA home loan.
What is a VA Home Loan?
Credit: benefits.va.gov
A VA home loan is a mortgage loan backed by the federal government’s Department of Veteran Affairs (the VA). Lenders may offer a VA home loan to active service members, military veterans, and surviving spouses who wish to buy, build, repair, retain, or refurbish a primary residence.
The VA guarantees up to a quarter of the loan (up to a maximum of $113,275). Thanks to this support from the federal government, lenders are willing to offer VA loans at lower interest rates and without asking for a down payment or mortgage insurance. Eligible home buyers find it much easier to get approval for a VA home loan than if they were trying for a conventional loan.
Who is Eligible and What Proof is Needed?
These people are eligible for a VA home loan: veterans who have served at least 90 consecutive days of active service in wartime or 181 days of active service in peacetime; members of the National Guard and Reserve who have served at least 6 years; and spouses of veterans who died in the line of duty or as a consequence of a service-related injury.
To get a VA home loan, all you need to do is show your lender a Certificate of Eligibility (COE) from the VA. A COE can be obtained from eBenefits website, by mail, or by filling out VA Form 26-1880. Some lenders also offer to help with the COE application process.
The process of applying for a VA home loan is similar to that of a conventional home loan, with some minor differences. The valuation and assessment of property conditions must be conducted by an appraiser who has been assigned by the Department of Veterans Affairs. The home buyer must pay a funding fee of 2.15% of the amount of the loan (or 2.4% for members of the National Guard and Reserves). Surviving spouses and veterans receiving VA disability compensation are exempt from the fee. The fee can be reduced to 1.5% with a 5% down payment or 1.25% with a 10% down payment.
Like conventional loans, most VA loans close within 30-45 days.
Advantages to VA Loans
The benefits of having a VA-guaranteed loan include:
- Lower interest rate and APR;
- Equal opportunity for all eligible veterans;
- Loan is re-usable;
- No down payment, as long as sales price doesn’t exceed appraised value of the property;
- No need to purchase private mortgage insurance;
- VA funding fee can be wrapped into the cost of the loan. Anyone receiving VA disability compensation is exempt from funding fee;
- Lower closing costs than for a conventional home loan;
- VA staff are there to assist if the home buyer becomes delinquent on their loan.
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