13 Apr Why Choose VA Home Loans – 5 Top Benefits
VA home loan benefit is one of the most successful perks offered to veterans. It has helped millions of veterans, service members, and military families fulfill the dream of owning a home. Let’s take a look at a few reasons which make the VA home loan program so impactful.
No Down Payment
No Down is the program’s signature benefit. Eligible VA Loan borrowers are allowed to make a home purchase up to a county’s conforming loan limit without any down payment. The down payment limits change regularly and are area specific.
For standard and FHA loans, buyers must meet the minimum down payment requirements of 5 percent and 3.5 percent, respectively. On a $250,000 mortgage, that’s a $12,500 down payment for a standard loan and an $8,750 down payment for FHA.
A regular service member or a veteran would need years to save that kind of cash. The ability to purchase with no down payment enables military homebuyers to become homeowners without saving for years to be eligible.
No Private Mortgage Insurance
Managing a down payment is already tricky for regular and FHA buyers. Mortgage insurance adds to the list of burdens. Fortunately, VA loans do not require mortgage insurance.
VA loans do demand a mandatory funding fee that goes directly to the Department of Veterans Affairs.
Flexible Credit Requirements
Credit score benchmarks for regular home loans are tough to achieve. VA lenders provide a respite to veterans. Most VA lenders demand a credit score of at least 620.
The 620 benchmark is in FICO’s “Fair” credit score range, which is a tier below “Good” and two below “Excellent.” Contrary to misconception, VA buyers don’t need anything near perfect credit to secure financing.
Every mortgage product involves closing costs. The VA loan program is an exception to this. VA issues an upper limit to the fees and closing costs veterans need to pay.
Foreclosure and Bankruptcy
Past bankruptcy or foreclosure does not negatively impact your VA loan chances. It’s possible to secure a VA home loan just two years removed from a foreclosure, short sale, or bankruptcy. In some cases, veterans who file for Chapter 13 bankruptcy protection can be eligible just a year removed from the filing date.