Benefits of VA Home Loans

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Benefits of VA Home Loans

To date, the VA loan has helped millions of service members, veterans, and military families purchase their dream homes. Thanks to the many benefits, more and more veterans are taking advantage of the VA loan–many who wouldn’t otherwise qualify. If you’re searching for a mortgage and meet the VA loan criteria, here’s why you should consider using the VA home loan.

Zero down payment
No years of waiting to scrape together a down payment. Qualified borrowers can purchase a home with no money down. This is a big benefit for buyers who are looking to purchase on a short timeline. This is in contrast to conventional and FHA loans that typically require at least 3.5 to 5% down.

Higher debt-to-income ratios
It is possible for the debt-to-income ratio to go up as high as 55%. This, of course, depends on the lender, the borrower’s credit score and their repayment ability. The average debt-to-income ratio is 41% which makes this a significant benefit.

Limited closing costs
Closing costs are fees that have to be paid regardless of the type of home loan. Fortunately for VA loan borrowers, the VA limits the fees qualified borrowers have to pay. A buyer’s closing costs can be paid by the seller and sales concessions have a limit of 4%.

No mortgage insurance
VA loans do not require borrowers to have mortgage insurance. Conventional loans require borrowers to pay mortgage insurance monthly until enough equity is built. And FHA loans carry a mortgage insurance premium as well as annual mortgage insurance.

The VA does have a mandatory fee unless a borrower has a service-connected disability.

Other benefits include:

  • Lower average interest rates than FHA and conventional loans
  • Zero prepayment penalties
  • Refinancing options even if the original loan is not through the VA loan program
  • The possibility of purchasing more homes using remaining loan entitlement
  • Assumable mortgage options
  • Advocacy program to find alternatives to foreclosure

Need help understanding your benefits? Give us a call at 949-356-6400.

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