Are you a veteran home buyer wondering about the advantages of a VA home loan? Why should you choose a VA home loan over a conventional loan? VA loans come with several benefits for veteran buyers, though using one means the home-buying process is slightly different.
If you’re a first-time home buyer, you might want to learn more about the advantages of VA loans and the eligibility requirements that come with them. In this post, our experts at Your Home Sold Guaranteed Realty - The Salas Team will discuss five benefits of VA loans.
Our team is proud to be veteran-owned and operated. We’re dedicated to providing the knowledge you need to make informed decisions on your home-buying journey.
There’s No Limits For VA Entitlement
VA entitlement is the coverage that the VA will provide in the event you default on your loan. While there were previously limits in place on the VA entitlement amount for all borrowers, this is no longer the case.
To receive full entitlement in the event of a loan default, you’ll have to meet the right qualifications. A few situations that qualify you for full entitlement include:
- Never having used your VA entitlement benefit before
- Selling a property and completely paying off its VA loan
- Experiencing a foreclosure or compromise claim that resulted in repaying your VA loan in full
As long as you meet the right criteria, then the VA will repay your lender up to 25% of the loan amount.
If you don’t qualify for full entitlement, the amount that the VA will cover is determined by the loan limit set by your county. Ask your lender for more information to learn about the potential coverage you can expect in the event of a loan default.
Private Mortgage Insurance Isn’t a Requirement
Private mortgage insurance (PMI) is meant to protect lenders in the event of borrower defaults. PMI is typically required for borrowers who can’t afford a down payment of at least 20%. If the 20% threshold can’t be met, PMI becomes an additional cost added on top of the monthly mortgage payment. On average, PMI ranges from 0.5% to two percent.
PMI is required for all loan types, except VA loans. This means you can make a down payment of any amount without worrying about a higher monthly payment. Ultimately, this gives you the financial flexibility to invest your money in your new home.
Credit Requirements Are Less Strict
The VA does not have any specific credit score requirements. Instead, qualifying credit scores are determined by individual lenders, and typically range from 580 to 660.
While it doesn’t have credit requirements, the VA does set a maximum debt-to-income ratio limit of 41%. But you can still qualify for a VA home loan if your debt-to-income ratio is higher, as long as you show you have sufficient residual income.
It’s important to note that individual lenders may define their own debt-to-income ratio, along with other financial metrics. Some lenders may even offer less strict financial qualifications for veteran clients. For this reason, be sure to interview multiple lenders and ask about their loan terms for veterans.
No Need For a Down Payment
One of the most significant advantages of a VA home loan is that you don’t have to worry about affording a down payment. In fact, you don’t have to worry about making a down payment at all.
On average, down payments with a conventional home loan are usually five to ten percent of the home’s sale price. Even loans for low-income borrowers, like those offered by the Federal Housing Administration (FHA), still require a minimum down payment of around 3.5%.
But with a VA home loan, there is no need for a minimum amount required for a down payment. You’ll be able to purchase a qualifying home with as small or as big of a down payment as you’d like, regardless of the home’s sale price or the lender’s requirements. This benefit is especially helpful for veteran home buyers who are struggling to save up enough for a down payment.
VA Loans Are a Lifetime Benefit
The last advantage of VA home loans is that you can enjoy their benefits for your entire lifetime. This means you’ll be able to apply and receive a VA home loan every time you purchase a new property.
You’ll also be able to take out more than one VA loan at a time, if you have a sufficient amount of VA entitlement remaining.
It’s also important to note that VA home loans can only be used for primary residences. Despite this rule, it’s still possible to rent out your first home and live in a second property as long as you make sure to meet the occupancy requirements set by the VA.
If you’re considering renting your first property and purchasing a second primary residence with a VA loan, be sure to consult with an experienced lender or realtor. A professional who’s familiar with the VA’s rules can make sure you have a clear understanding of the process.
Learn More Advantages of a VA Home Loan With Our Team
If you’re looking to buy a new home, you’ll need to hire a realtor who specializes in working with veterans. At Your Home Sold Guaranteed Realty - The Salas Team, we’ve served veteran home buyers in the Killeen, Texas, area for years.
In fact, our real estate business is veteran-owned and operated. This means we have first-hand experience to help veteran buyers navigate the market successfully and use all the advantages of a VA home loan.
On top of our experience, we also offer several buyer guarantees that make buying a home with us risk-free. This includes our Buyer Cancellation Guarantee, which ensures you’ll be satisfied with your new home. If not, our team will buy it back from you any time within 18 months of the date the deal closes.
To learn more about what it’s like working with our team in Killeen, give us a call at 855-331-7653. You can also fill out the form on this page.