25 Apr What is the VA home loan program, and what are its benefits and requirements?
First-time home buyers make a huge investment. Having abundant funds is only sometimes in the plans for Veterans who dedicate their lives to their country. In order to help the nation’s favorites purchase their dream home, VA home loans are perhaps one of the most valued military benefits.
Veterans and surviving spouses are eligible for VA home loans with no down payment. You can buy your home with these loans without making a down payment, and they have extremely low-interest rates.
Veteran home loans are also backed by the Department of Veterans Affairs (VA) and are available to Veterans with low credit scores.
VA home loans can be obtained in the following ways:
Requirements for VA Loans
A VA Certificate of Eligibility (COE) is required to start your VA home loan application. Any ONE of the following requirements must be met to qualify for the COE:
- During peacetime, you have served at least 181 consecutive days in the military.
- You have served at least 90 consecutive days of military service during wartime.
- You must have at least six years of experience as a National Guard or Reserve member or have served at least
- 90 consecutive days under Title 32.
- The spouse of a service member/Veteran who died in the line of duty or on duty related to service.
Depending on your military status, you must submit the following documents once you meet the above criteria.
Veteran: DD Form 214
Active Military Member: Statement of service signed by an officer
Current/Former National Guard or Reservist: DD Form 214, an annual point statement, DD 220 with corresponding orders.
Surviving Spouse: Veteran’s DD Form 214, marriage license, VA form 21p-534-ARE
To be eligible for a VA home loan, you must also meet the following requirements in addition to the VA COE:
Qualifying Property: You must agree to move into the property within 60 days of loan closing as your primary residence. The property must also meet all MPRs.
Credit Score: Though the VA does not require an outstanding credit score, you must have at least a minimum score of 580 to qualify.
Income: You should have a debt-to-income ratio that is appropriate and a residual income that is sufficient.
Veteran Home Loan Benefits
Using a VA loan doesn’t require a downpayment, which is one of its biggest benefits. Besides that, VA home loans offer the following benefits:
Lower Rates: Compared to conventional loans, VA loans are available at an incredibly lower rate, mainly, because the VA backs a portion of the VA loan amount.
No Down Payment: You don’t need to make a downpayment for a VA loan. If you have enough funds, making a downpayment can help you reduce monthly payments. However, you can go for the no-down payment option if there’s no access to funds.
100% Equity Value: You don’t need equity to refinance your VA loan at a lower rate.
No Private Mortgage Insurance: Apart from no down payment options, you don’t need to pay for Private Mortgage Insurance either.
Lenient Requirements: With lower credit scores and even lower income requirements, qualifying for a Veteran home loan is pretty easy.
Summing It Up
An earned military benefit is a VA loan. To purchase your dream home, you can take advantage of perks like no down payment and no pre-penalty requirements.