Our war veterans and active service duty members have faced and continue to face hardships that a common man can’t even imagine. The government, therefore, has a moral obligation of repaying these heroes in whichever way possible. In 1944, the US Congress passed the original Servicemen’s Readjustment Act to help eligible war veterans and their spouses to obtain home loans on easy borrowing and repayment terms. The government has insured more than 20 million home loans till date. While most war veterans might be aware of the benefits of VA loans, here are a few facts that one must know.
1. Zero Down Payment Criterion Varies
One of the factors that works most in the favor of the veterans is that VA loans don’t require any down payment. But did you know that the maximum VA loan with no down payment varies from one county to another. For most counties the maximum loan amount with no down payment is $417,000. For a few “high cost counties”, it may go up to $1,094,625.
2. No Mortgage Insurance Premium
PMI companies charge borrowers a mortgage insurance premium to reduce the risk of the lender, in case a customer defaults. The VA, however, insures the loan on behalf of VA home loan borrowers, thereby saving them a substantial amount of money. The only fee the borrowers need to pay is the VA funding fee.
3. VA loans Have Occupancy Criterion
The VA does not finance veterans or service members for purchasing vacation homes, investment properties or any other real estate property that would be used for any other purpose but primary residence. VA also requires the borrowers to occupy the property within 60 days from the date of closing.
4. You can Obtain VA Loans More than Once
One of the most prevalent myths about VA home loans is that they can be obtained only once.
This, however, is not true and one can borrow as many times as they want, provided they have sold their existing home and paid off the mortgage. If borrowers don’t want to sell the old property, they can rent the old one and show that the second property would be their primary one.
5. Lower Credit Benchmarks
You may be surprised to know that even the borrowers who experienced issues such as bankruptcy or foreclosure are eligible for obtaining a VA home loan, though it may require them to wait for a period of two years before they apply for one. In other regular cases also the minimum credit score requirement is around 100 points less than what’s required in a conventional loan.
6. Borrowers Must Pay an Upfront funding fee
Though VA loans come with several benefits such as zero down payment and no premium mortgage insurance fee, borrowers are required to pay a VA funding fee that is required by the VA to cover for losses in case someone defaults. Borrowers may, however, roll the fee into their existing loan provided the loan amount does not exceed the maximum permissible limit.
Last Few Words
The VA home loan program is definitely a great initiative by the government to help veterans realize their dreams of buying a home. The borrowers, however, need to ensure that they fulfill all the criteria for obtaining a VA loan. In case you are facing any issues in obtaining a VA home loan, you must get in touch with one of the many VA home loan lenders in Texas to help you avoid the roadblocks that could possibly be preventing you from getting one.