If you have served in the military and are planning to purchase a new home, you may be considering a VA home loan. VA loans offer a number of advantages. Here are a few of them.
VA Home Loans Don't Require A Down Payment
If a homebuyer secures a conventional FHA loan, they can expect a down payment of up to at least 3.5 percent. This down payment can be a significant obstacle for young homebuyers who may not have saved a large amount of money.
Borrowers who receive VA loans are not required to submit a down payment as long as their home purchase is within the designated limits. If the purchase exceeds those limits, a small down payment may be required. Nevertheless, the limits are reviewed and changed annually to conform to the changing housing market.
VA Home Loans Don't Require Separate Mortgage Insurance
Homebuyers who finance their home purchase with FHA loans may be required to obtain mortgage insurance. This insurance requires an upfront premium and must be maintained until a required level of equity has accrued. Thus, conventional buyers may have to maintain the insurance for years.
Military buyers with VA loans are not required to have private mortgage insurance. Instead, a funding fee that is paid to the Department of Veterans Affairs is used to protect the VA loan. Nevertheless, if a borrower is disabled because of an injury that is related to their service, they are exempted from this fee.
VA Home Loans Have Less Stringent Credit Requirements
To obtain a favorable interest rate, a conventional homebuyer needs a relatively high credit score. However, even though VA loan lenders may have a benchmark score requirement, the score is usually significantly less than the requirement for an FHA loan. A military veteran may be approved for a VA loan with a credit score that is only in the "fair" range.
Even a past foreclosure may not prevent a military applicant from receiving a VA loan. If a couple of years have passed since a negative credit situation, such as a foreclosure or bankruptcy, lenders may still approve the VA loan.
VA Home Loans Have Flexible Debt-To-Income Ratios
Some VA lenders still offer VA home loans if an applicant's debt-to-income ratio is about 41 percent. However, you may face more difficulties if your debt-to-income ratio is higher than 41 percent. The greater flexibility in these ratios can help military applicants increase their home-buying power.
If you are a veteran and would like to purchase a home, schedule a consultation with a real estate professional in your local area.
Share29 July 2021
If you want to buy or sell property, read this blog to learn how a real estate agent or broker can help you make a successful purchase or sale. We don't work in real estate, but we do know the difficulties of trying to buy or sell without consulting with a real estate agent. We've done our research and we've also spoken with several agents and brokers to get information for this blog. As you read these posts you'll learn about the duties of an agent including showing properties, negotiating prices and preparing contracts. We hope that our blog gives you a better understanding about the responsibilities of real estate agents and how they can help you when buying or selling.
