18 Jan What are the Benefits of VA Construction and the process of obtaining it?
VA construction loans and VA home loans are two types of mortgage loans guaranteed by the Department of Veterans Affairs (VA). They are available to eligible veterans, active duty military members, and certain surviving spouses. These loans provide many benefits for veterans and their families, including lower interest rates, no down payment requirements, and more flexible underwriting standards. This blog post discusses the benefits of VA construction loans and VA home loans and the process and qualifications for obtaining them.
One of the main benefits of VA construction loans is that they allow veterans to build their homes without making payments. This is a significant advantage for veterans needing more savings or credit to make a traditional down payment. Additionally, the interest rates on VA construction loans are often lower than those of conventional construction loans, making them more affordable for veterans.
Another benefit of VA construction loans is their more flexible underwriting standards. Veterans may qualify for a loan even if they have less-than-perfect credit or other financial challenges. Additionally, VA construction loans may also be used to purchase a manufactured home or to make energy-efficient improvements to an existing home.
On the other hand, VA home loans are used to purchase a home that is already built. Like VA construction loans, they also have many benefits, including no down payment requirements, lower interest rates, and more flexible underwriting standards. Additionally, veterans who use a VA home loan may be able to avoid paying private mortgage insurance (PMI), which can add hundreds of dollars to their monthly mortgage payments.
VA construction loans or VA home loan is relatively straightforward. First, veterans must receive a Certificate of Eligibility (COE) from the VA. This certificate verifies that the veteran is eligible for a VA loan and is required by all VA-approved lenders. Veterans can obtain a COE by submitting a VA Form 26-1880 (Request for a Certificate of Eligibility) to the VA or by applying online through the eBenefits portal.
Once a veteran has obtained a COE, they can apply for a VA construction loan or a VA home loan. This process typically involves working with a VA-approved lender, who will help the veteran complete the loan application and submit it to the VA for approval. The lender will also work with the veteran to obtain necessary documentation, such as proof of income and employment, and complete a credit check.
To qualify for a VA construction loan or a VA home loan, veterans must meet specific eligibility requirements. These include:
Active duty military members and veterans who enlisted during wartime or at least 181 days during peacetime.
National Guard or Reserves members who have served at least six years and were called to active duty by a federal order.
Certain surviving spouses of veterans who died in service or as a result of a service-connected disability.
In addition to these basic eligibility requirements, veterans must also meet specific credit and income requirements. These requirements vary depending on the lender and the particular loan program but typically include a minimum credit score and income level.
In conclusion, VA construction loans and VA home loans are two types of mortgage loans guaranteed by the Department of Veterans Affairs and available to eligible veterans, active duty military members and certain surviving spouses. They have many benefits like lower interest rates, no down payment requirements and more flexible underwriting standards. VA construction loans or VA home loans are relatively straightforward and involve working with a VA-approved lender.