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VA Home Loans: A Benefit for Those Who Serve

Jamey Dodson May 15, 2024
Young black man and  young black woman wearing Army fatigues in front of their new home purchased using her VA Home Loan benefit.

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VA Home Loans are a benefit earned by our nation's veterans, active-duty service members, and eligible surviving spouses to help them realize the dream of owning a home.

These loans typically require little or no downpayment and have more attractive interest rates than those of conventional loans.

VA loans are supported by the US government, minimizing risk for lenders, unlike traditional loans. Since their inception as part of the GI Bill in 1944, over 22 million VA loans have been approved.

Interested in learning more and if you are eligible? Let’s dive into the details.

What Are VA Home Loans?

  • VA loans are loans backed by the U.S. Department of Veterans Affairs (VA).
  • While the VA does not directly issue loans, it determines the eligibility criteria and selects participating lenders.
  • Private lenders, such as banks and mortgage companies, offer the loans, with the VA guaranteeing up to 25% of the loan amount, enabling lenders to provide favorable terms.

Key Benefits of VA Home Loans – What's in It for You?

  • No down payment is required to qualify for a VA loan, although some lenders may ask you to provide one.
  • VA loans typically offer attractive interest rates.
  • Closing costs are generally lower compared to conventional loans.
  • Unlike conventional loans, VA loans do not require to you to have Private Mortgage Insurance (PMI).
  • Veterans can utilize the VA home loan guaranty multiple times throughout their lives.
  • VA loans are non-conforming, making home ownership an option to individuals with less-than-perfect credit scores.

Eligibility and Applying for VA Home Loans – How to Get Started?

  • Eligibility requires you to provide a Certificate of Eligibility (COE) confirming your honorable service and required time served. (COEs can be obtained through VA-approved lenders, the VA's e-Benefits website, or by mail using VA Form 26-1880.)
  • Eligible purposes for loans include purchasing single- or multi-family homes, condos, or townhouses, improving a home, buying a manufactured home and lot, building a home, or enhancing energy efficiency.

2024 Entitlement and Loan Limits

  • Entitlement is the amount the VA guarantees on your loan and what it repays the lender if you default.
  • Full Entitlement means that none of your benefits are currently being used to finance another property.
  • As of 2020, the VA eliminated loan limits for those who have full entitlement.
  • If you have Full Entitlement, you won’t need a down payment, unless your lender requires one.
  • As of 2024, if you have full entitlement and are eligible, you generally won't face limits on loans over $144,000.

Your Responsibility – You’re almost there!

  • Eligibility does not guarantee loan approval; borrowing capacity depends on what your lender is willing to finance.
  • Ensure your credit score is strong; the VA’s minimum required FICO score is 620, but some lenders may require higher.
  • Maintain a clean credit history and timely bill payments.
  • Verify stable and sufficient income to cover mortgage, insurance, repairs, and living expenses.

Conclusion

VA Home Loans represent a valuable benefit, providing our veterans with the opportunity for homeownership under favorable terms and lifelong advantages. If eligible, explore this resource with your lender – your dream of owning your own home could come true sooner than you believed!

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