for Every Homebuyer
VA Loans
For active duty or retired service members who meet the eligibility requirements of the US Department of Veteran's Affairs (VA), the VA loan is among the most prominent of state-sponsored benefits offered to those who have served their country. Sporting below-market interest rates, a 0% down payment requirement, and a high degree of flexibility for borrower financial backgrounds, eligible recipients of VA benefits should absolutely consider utilizing this versatile program.
The VA loan is a highly effective program. Every year, the VA guarantees millions of these loans across the nation. In 2021, the VA guaranteed a record 1.4 million purchase or refinance loans, averaging 3,836 mortgages in a single day. With the high degree of flexibility offered by the VA purchase loan, and the low-cost efficiency of the VA refinance, this program has proven to be an invaluable tool for millions of proud US veterans and their families.
Let's browse some of the highlights:
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Competitive Rates
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No Mortgage Insurance
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0% Down Payment Minimum
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VA-Offered Borrower Assistance In Event of Hardship
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Lower Closing Costs, With Possible Seller Contributions
We recommend reading more about this program at the VA's website, in addition to our description below.
VA Loans
Minimum FICO Score: None, Lender-Dependent
Available Loan Terms: 10-30 Years
Minimum Down Payment: 0%
Maximum Rate/Term Refinance LTV: 100%
Maximum Cash Out Refinance LTV: 100%
Time From Bankruptcy: 2 Years Ch.7; 1 Year Ch.13
Time From Foreclosure/Short Sale: 2 Years
Mortgage Insurance (Y/N): No
Eligible Use: Primary, Secondary with Restrictions
Eligible Properties: Residential 1-4 Unit Properties
(Condos & Townhomes Eligible With HOA Review)
(Surviving Spouses of Eligible Veterans Can Also Use VA Loans)
VA loans, available both as fixed-rate and ARM programs in varying lengths, present highly beneficial loan terms to active duty and retired members of the service, ranging from competitive interest rates and more lenient reviews of past credit or financial events.
Unlike conventional and FHA loans, which have limits dictated by national and county-level policies, VA loans have no upper limit at these levels. For veterans with full entitlement, meaning that they either have never used a VA loan before or have fully paid off any prior VA loans, any loan limits are solely dictated by the lender offering the VA-guaranteed mortgage. Keep that in mind when you look at your Certificate of Eligibility (COE); your entitlement is not the same as what you qualify for.
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The absence of PMI or MIP also sets VA home financing apart from conventional and FHA programs. Avoiding this additional monthly payment can save you thousands across the life of a loan when compared to alternatives that are subject to forms of monthly mortgage insurance.
However, a one-time cost, known as the funding fee, is levied on all VA mortgages. This funding fee is calculated as a percentage of the loan amount, and varies based on the down payment percentage (if any), previous uses of a VA loan program, and any service-related disabilities. The funding fee for a first time user of the VA loan program is 2.3% of the loan amount. If you are 10% or more disabled, the funding fee is waived completely.
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Bear in mind that when purchasing a home with a 0% down VA loan, the home needs to be appraised at the purchase price or higher. This is to avoid the loan to value ratio (LTV) exceeding 100%.
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Got Docs?
Getting Prepped for Approval
Documentation requirements for VA loans are very similar to conventional loans and other government-backed loan programs. There are a handful of additional documents that your lender will need, such as your Certificate of Eligibility (COE), and DD-214 discharge paperwork if applicable.
Though these prime loan products may be demanding with documentation, your subsequent airtight approval will qualify you for competitive financing options. To see what documents you'll need for conventional loans, check out our prior to approval checklist page.