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Guide to Using the VA Loan to Score a No-Down-Payment Home

Guide to Using the VA Loan to Score a No-Down-Payment Home

If you’re currently serving or have served in the U.S. military – or you spouse did – you may be eligible for a special home loan program that can save you thousands of dollars. Insured by the Department of Veterans Affairs, a VA home loan functions like other loans but with additional flexibility and privileges.

Read on to find out more about VA loans – and if you’re eligible.

Am I eligible?

Started in 1944, the Department of Veterans Affairs established a loan program to help vets returning home from World War II to begin the rest of their lives.

The premise was simple: Most soldiers would not have enough money to initiate a loan for a business, home or property, so the government eliminated vets’ need to make down-payments on certain loans.

In return to the lenders, the Department of Veterans Affairs agrees to take the fall if the borrower defaults on the loan.

Today, the following individuals are eligible for a VA home loan:

  • Veterans who served for a minimum amount of time during an eligible active duty period and were not dishonorably discharged
  • Some current active duty service members
  • Spouses of service members who died

Additionally, applicants must have a credit score of 620 or higher to be eligible for the VA home loan.

For more information and to begin the process, fill out a Certificate of Eligibility.

Main benefits

The main benefits of a VA home loan are its flexibility and cost-saving measures that can cut down the cost of a mortgage over the long-term. These include:

  • No need to provide a down payment to secure a loan
  • Refinance up to 120 percent of the property’s value to make immediate energy efficiency improvements
  • Choose among fixed-rate mortgages of 15, 20 or 30 years; or a 5-year adjustable-rate mortgage
  • Exempt from paying private mortgage insurance – a savings of usually thousands of dollars
  • Can be used to purchase an existing home, a lot to build a home or a VA-approved condominium

Applicants can borrow from any mortgage company they wish to use that provides VA-backed home loans.

Is there a catch?

There really isn’t a catch to a VA home loan if you are an eligible returning service person or on active duty and want to enjoy the privileges of home ownership. Of course, interested parties should still do their due diligence to choose a credible and quality mortgage company when considering beginning the VA home loan process.

They should also do their own research into the property itself and make sure that they keep rigorous records of the entire home loan process as they normally would with other types of loans.

If there is a “catch” to a VA home loan, it might be the associated funding fee to get access to a VA home loan. This can range from less than 1 percent to slightly more than 3 percent of the full value of the loan.

Applicants can choose to pay it upfront or roll it into the loan itself. However, disabled veterans may be able to waive part or all of the funding fee.

For more information, visit the Department of Veterans Affairs webpage on VA home loans or give us a call. Ace Mortgage has helped many veterans and their families become homeowners, and we’d be happy to do the same for you.