With all the economic uncertainty pressing into 2022, VA loans are still one of the top home loan options for members of the military and their spouses. First-time homebuyers and those relocating can benefit greatly by applying for a VA loan. What’s more, a VA loan can help establish financial stability by building equity through homeownership.
VA home loans offer some of the best benefits available whether you’re looking for your rural property, a fixer-upper, or a home in the suburbs.
Most clients considering VA loans want to know if they’re eligible. In this article, we’ll answer the top questions we hear most often: who is eligible, what are the main benefits, and how much will I need for a down payment.
VA Loans – an Overview
VA Loans are offered through banks and qualified mortgage lenders. Since VA loans are government-backed mortgages, they are partially guaranteed by the U.S. Department of Veteran’s Affairs. This means that mortgage lenders can offer lower mortgage rates and lower down payment requirements. Homebuyers also have more flexibility when it comes to credit score criteria.
Top Advantages of VA Home Loans
- 0% down payment
- Low interest rates (compared to FHA and conventional loans)
- Fewer closing costs
- Private mortgage insurance (PMI) isn’t required
- 1% loan origination fee (maximum)
Popular Types of VA Loans
- Purchase Mortgage — This is a standard VA home loan based on purchasing a new home.
- Cash-out Refinance — This loan allows homeowners to refinance an existing home loan into a VA loan and access cash based on home equity.
- Streamline Refinance — The VA IRRRL allows homeowners to refinance an existing VA loan to get better loan terms and a lower interest rate (without cash out).
- Renovation Loans — This VA loan helps homeowners finance the cost of renovations and repairs into a new VA Loan with one mortgage.
VA Home Loans — Guidelines for 2022
As of December 2020, qualified homebuyers no longer face purchase limits for a VA loan. This means that you can still qualify for a zero-down mortgage without having a cap on the purchase price. To qualify, borrowers will still need to meet certain requirements such as income verification and debt-to-income ratios. The lender sets most terms, and the final loan approval will confirm how much a homebuyer can borrow.
One thing to note: VA home loans require a funding fee (0.5 – 3.6%) for both home purchases and refinancing. Veterans Affairs sets this fee as it helps make the loans possible for all qualified service members and eligible spouses. The funding fee is a one-time cost and can often be rolled into the loan.
VA Loans — How to Determine Eligibility
Applying for a VA Loan and qualifying is a fairly straightforward process. Before the loan closes, you’ll need to secure a VA certificate of eligibility (COE). This can be requested from the U.S. Department of Veteran’s Affairs.
Eligibility Requirements for VA Loans:
- Active-duty service members
- Veterans who meet minimum service requirements
- Surviving spouses of both qualifying service members and veterans
- Members of the National Guard and Reserves who meet the eligibility criteria
If you’re uncertain whether or not you might qualify, you can get in touch with me directly to figure out the next steps.
Finally, to apply for a VA loan, you’ll need to work with a VA-approved mortgage broker. Working with an experienced mortgage broker can keep things moving along and relieve a lot of stress. We’d love to help.
Pre-approval for a VA home loan can get you a great mortgage in 2022. We can help guide you through the VA home loan process and help you get approved.
We work with homeowners throughout California, Oregon, Washington and Colorado. Our goal is to help you reach financial freedom and save money on your mortgage. VA loans offer some of the best benefits around for homebuyers who are eligible. Feel free to reach me directly at (408) 610-8011.