How a VA Loan Can Set You on the Path to Home Ownership
By Lorraine Ryall
Associate Broker, CDPE, CSSN, CNE
KOR Properties
With Veterans Day approaching, we all think about what else we can do to help who have
valiantly served our country and made such sacrifices. As a Certified VA Realtor and supporter
of the Veterans Advocacy and Benefits Association, I am honored to be able to help veterans
purchase a home.
A VA loan is a mortgage guaranteed by the U.S. Department of Veterans Affairs and issued by a
private lender, such as a bank, credit union, or mortgage company.
There are many benefits that veterans may not be aware of. What better time than during
Veterans Day to write this article and give information about what a VA loan is, who qualifies,
and what benefits it offers to help veterans who are thinking about purchasing a home?
Why You Should Consider a VA Loan
As a military homebuyer, you may be eligible for the fantastic advantages of a VA Loan. This
powerful loan option can help you afford the home of your dreams with benefits that may result
in huge savings. Due to the monthly savings, it may also allow you to purchase a higher-priced
home than you could if using a regular conventional or FHA loan.
VA Home Loan Eligibility
You may be eligible if you meet one or more of the following requirements:
– Serving on active duty during wartime for 90 consecutive days
- Serving in the National Guard or Reserves for at least six years
– Discharged under honorable conditions
- Serving on active duty during peacetime for at least 181 days
- The spouse of a service member who died in the line of duty or as a result of a service-
related injury
Those eligible will get a Certificate of Eligibility (COE) which is required to prove eligibility
for a VA Loan. Your lender can help you obtain a COE or you can request it through the VA
website: ebenefits.va.gov.
Advantages and Benefits of a VA Home Loan
– No down payment: Other loan types require down payments.
- No mortgage insurance required: FHA loans require mortgage insurance regardless of
the down payment amount and conventional loans usually require mortgage insurance if
the down payment is less than 20 percent.
- Lower rates: VA loans usually have lower rates than conventional mortgages.
- Limited closing costs: Closing costs are the various fees and expenses you pay to get a
mortgage. The Department of Veterans Affairs limits the lender’s origination fee to no
more than one percent of the loan amount and prohibits lenders from charging some other
closing costs.
- VA loans can be assumed: This means that when you’re ready to sell your home, you
have the option of allowing the buyer to take over your existing mortgage. This can be a
selling point if your rate is lower than the current average mortgage rate.
VA Loan Disadvantages
- VA loan funding fee: Although VA loans don’t require mortgage insurance, they come
with an extra cost called a funding fee. The fee is set by the federal government. As of
April 7, 2023, the fee ranges from 1.25 to 3.3 percent of the loan, depending on your
down payment and whether it’s your first VA loan. You can pay the fee upfront or fold it
into the loan. It is possible to have the funding fee waived if you’re a veteran receiving
disability or an unmarried surviving spouse.
- Purchase loans are only for primary homes: You can’t use a VA loan to buy an
investment property or a vacation home.
Types of VA Loans
The VA loan program offers a variety of options, including:
- Home Purchase
- New Build
- Refinance Mortgage
- Renovation Loan
- Rehab Loan
- Native American Direct Loan
Loan Limit of a VA Loan
There is no loan limit for a VA loan, but you do need to meet the lender’s requirements for
credit and income.
Minimum Credit Score
The VA doesn’t set a minimum credit score for VA loans, but lenders can set their own
minimum standards. The lender will also consider your income and debts to evaluate your
ability to repay the mortgage.
Types of Properties that Qualifies
The property you want to buy must meet safety standards and building codes and will be your
primary residence. Borrowers are typically required to occupy the residence within 60 days,
though this may be extended to 12 months under certain circumstances.
The VA does not limit property type to a single-unit primary residence. Duplexes and
fourplexes are allowable as long as the borrower occupies one of the units as their primary
residence.
Getting a VA loan isn’t a one-time deal. As long as you’re eligible and you’re able to qualify
with a lender, there’s no limit to how many times you can take out a VA loan in your lifetime.
Please don’t hesitate to contact me if you would like help finding your perfect home, have any
questions, or would like recommendations to top VA lenders who can guide you through the
process.
Lorraine is a Multi-Million Dollar producing agent, has been a full-time Realtor for over 15
years, is an Associate Broker of KOR Properties, a Certified Negotiation Specialist, and is on
the Professional Standards Board. You can reach Lorraine at (602) 571-6799.