If you are a veteran, active military member, or a spouse of a deceased veteran, you may be eligible to purchase a home or refinance with a VA loan. This loan program comes with many benefits over a conventional mortgage, and it’s designed to help those who have served our country achieve homeownership.
Let’s look at what a VA loan is and the benefits it offers to homebuyers and homeowners.
What is a VA Loan?
A VA loan is a type of mortgage issued by private lenders and backed by the U.S. Department of Veterans Affairs. It’s a loan program that helps U.S. veterans, active duty service members, and widowed military spouses buy a home.
Introduced as part of the GI Bill in 1944, VA loans have become very popular due to its less stringent qualification standards. A VA loan can be used to purchase a home, build a new house, make home improvements, or refinance your current mortgage. In 2019, 624,000 VA loans were issued, and nearly half of those (45%) went to younger Millennial and Generation Z homebuyers.
What are the VA Loan Requirements?
To qualify for a VA loan, you must meet one of the following criteria:
- You’re an active-duty U.S. military service member or an honorably discharged veteran. You can review the VA’s specified service requirements here.
- You have served at least six years in the National Guard or the Selected Reserve.
- You’re the spouse of a veteran who died in the line of duty.
When applying for a VA loan, you’ll need a Certificate of Eligibility (COE) to show lenders your proof of qualification. You can obtain a COE through the VA website, by mail, or through your lender.
What are the Benefits of a VA Loan?
Here are some of the key benefits and features of a VA home loan:
- No down payment is required. With a VA loan, you can buy a home by putting zero money down.
- There are no loan amount limits. There’s no cap on the amount you can borrow, but there a limit to the amount the VA guarantees. The standard VA loan limit is $548,250 for most U.S. counties in 2021, an increase from $510,400 in 2020. For more expensive housing markets in the continental U.S., VA loan limits reach up to $822,375 for 2021, up from $765,600 in 2020.
- This is no mortgage insurance requirement. As the government backs VA loans, borrowers do not need to pay for private mortgage insurance (PMI).
- There is no minimum credit score requirement.The VA itself doesn’t have a minimum credit score requirement. Still, lenders may set their own underwriting requirements, and many like to see a credit score of 620 or higher.
- There is no prepayment penalty. If you are able to pay off your VA loan early, you won’t be fined for doing so.
- You don’t need to be a first-time homebuyer. As long as you pay off your initial VA loan, you may get another one for buying your next home or refinancing your current VA loan.
- Bankruptcy and foreclosure won’t disqualify you. If you’ve filed for bankruptcy or have a foreclosure in your past, you may still qualify for a VA loan, as long as it’s been at least two years since the date of the bankruptcy or foreclosure.
Special Offers
Cross Timbers Mortgage is a certified veterans lending specialist. We also provide special offers to veterans in appreciation for their service, including up to $600 in closing credits applied towards your appraisal. Contact us today for more information and to get started on your VA loan.