What is a VA Loan?
The US Government's VA loan program helps US Veterans and members of the US Armed Forces qualify for a home loan. Backed by the US Department of Veterans Affairs, VA loans feature low down payment options and flexible credit guidelines for you and your family.
VA Loan Advantages
VA loans offer a myriad of advantages for your home purchase or mortgage refinance. Here are the six biggest:
No money down
Down payments are optional for VA loans at or under the local conforming limit. This limit is $453,100 for most of the country and up to $679,650 in high-cost areas.
Private Mortgage Insurance typically adds 0.2-0.9% of expenses to your monthly mortgage payments when you put less than 20% down. With a VA loan, you can say goodbye to PMI.
Fewer credit restrictions
Reduced restrictions make it easier to qualify for favorable home financing. With a VA loan, you’re allowed a higher debt-to-income ratio and afforded more leniency with your credit score.
The VA allows sellers to assist with up to 4% of closing costs.
Borrowers can refinance their homes with a VA streamline or cash-out loan. The streamline version lowers the mortgage rate of an existing VA loan, usually for less than the current principal and interest. This means it doesn't require a credit check or appraisal. The cash-out option involves a credit check and appraisal, since the home’s value represents the maximum loan amount and the new loan will be larger than the existing loan.
The VA allows new construction loans and increases to purchase loans for renovation projects. The VA’s Energy Efficiency Improvement program lets borrowers add up to $6,000 to their home loan amount to install solar heating, insulation, storm windows and more.
Are you qualified for a VA Loan?
A VA loan is a great option for qualified homebuyers and refinancers. The intended candidate is a service member or surviving spouse with a clean financial record. You are eligible for a VA loan if ALL the following statements are true:
- You are current/ex-military personnel or the surviving spouse.
- You have not defaulted on a loan within the last 12 months.
- You have not declared bankruptcy within the last two years.
To be eligible, you must serve for 90 or more days in wartime or 181 or more days in peacetime. In both cases, the stipulation is waived if you are discharged due to a service-related disability. Reserves and National Guard soldiers must serve for at least 6 years to be eligible.
The VA's benchmark debt-to-income ratio is 41%, but VA lenders are not confined to that standard. If your DTI isn’t below 41%, don't be discouraged. You might still be qualified for a VA loan.
Spouses of deceased service members are eligible for VA loan benefits, provided they have not remarried and ANY of the following statements are true of the deceased:
- Died in service or from a service-related disability.
- Was missing in action or a prisoner of war for at least 90 days.
- Was rated totally disabled and was eligible for disability compensation at the time of death.
Who is Guaranteed Rate?
We’re one of the largest retail mortgage lenders in the nation, funding $23 billion in home loans during 2016. We aim to win your trust and your business through a genuine desire to serve you, evident by our 95% customer satisfaction*.
- A low, low rate on the right mortgage product, along with transparent, fair fees.
- Technology that streamlines the mortgage process and simplifies each step.
- Unmatched service and expert advice to help you find the perfect mortgage.
Children of deceased veterans are not eligible for VA loan benefits.
*95% Customer Satisfaction: Data Source: Guaranteed Rate’s Client Satisfaction Surveys (Averaged 2007-2016)
Guaranteed Rate, Inc. is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the US Department of Agriculture or any other government agency.