If you’ve served in the United States Armed Forces, you may qualify for a Veterans Administration Loan, commonly called a VA loan. It’s a fabulous way to finance a home, especially your first home, because you can still get 100% financing – no down payment is required! Although the VA does charge a funding fee, which varies depending on what category you are in and your loan to value, it gets added to the loan amount so it is not an out of pocket expense. The other fabulous thing about a VA loan is that there is no mortgage insurance added on to your payment. Mortgage insurance typically gets charged when you borrow more than 80% of the value of the home, and it covers the lender if your home is foreclosed. Interest rates are comparable with rates for conforming conventional loans, making a VA loan one of the very best alternatives in the market today.
I’ve met with many veterans who have been told not to try to get a VA loan for various reasons, and they are amazed when I tell them they should! Be sure that you are talking with a mortgage professional who can do VA loans – not all lenders can – and that your consultant is familiar with VA loans. If you’re buying new construction, there are some additional restrictions, so be sure the builder is willing to comply with the VA guidelines. Your real estate professional also needs to be aware that you are in application for a VA loan, for the veteran is not allowed to pay for certain closing costs and this must be negotiated with the contract to purchase.
If you have been in the Reserves, you can still qualify for a VA loan if you have served a certain number of years, so be sure to ask. Bring your DD-214 with you, along with your income and asset documentation, to the interview with your home mortgage consultant, because she will need a copy in order to get your Certificate of Eligibility from the VA. You do not need excellent credit to get a VA loan, and you can only have one VA loan at a time. A VA loan is one of the best ways to buy a home when you have less than 20% down, so be sure to find out if you qualify.