VA Home Loan Benefits
VA home loan benefits give eligible borrowers access to mortgages with advantages that do not exist with conventional loans. There are several distinct elements of the VA loan that are designed to help Veterans and other eligible borrowers obtain home mortgages.
Unique Features of VA mortgages
- No down payment on most home purchases
- Certain closing costs limited by the VA
- No private mortgage insurance (PMI)
- No penalty for early loan repayment
- Free mortgage counseling for distressed borrowers
Lenders can offer no down payment up to conforming loan limits for borrowers with ample entitlement. This unique advantage of the VA loan program can benefit borrowers who haven't had the opportunity to save much money. In fact, 90% of VA purchases have been made without a down payment since the program's inception in 1944. No down payment alone can enable some eligible borrowers to purchase homes they might otherwise be unable to afford with other types of home mortgage programs. It may be helpful to prequalify so you get an idea of your budget before shopping for a home.
Another topic worth discussing is mortgage insurance. Most non-VA mortgages require costly PMI for borrowers who do not have at least 20 percent equity or more in their homes. Because a portion of VA loans are backed for the lender by the federal government, PMI is never allowed. A VA funding fee is required on most VA loans.
Eligibility requirements for a VA home loan
VA eligibility is earned through service to our country. Active duty (Title 10) members can become eligible after 90 straight days during wartime or 181 days during peacetime. If not called to active duty, regular military members need to serve two continuous years, and Reservists and Guard members must serve six years. The VA loan benefits are available to most Veterans who served prior to the early 1980s as long as they have 90 total days of active military duty during WWII, Korea War or Vietnam War, or 181 continuous days of active duty between these conflicts. This is just a summary of the eligibility guidelines. Find a more comprehensive overview on the Department of Veterans Affairs website.
Regardless of when you served, the VA has a rule regarding honorable discharge. To be eligible for VA home loans, a Veteran, if separated from the military, must have done so for reasons other than dishonorable discharge. Also, if your service was shortened due to an injury, illness, reduction in force or some other qualifying reason, the VA may still award home loan benefits in some cases even if you do not meet the minimum service duration requirements.
For more information about this topic and others, visit www.veteransfirst.com.
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