Veteran’s Benefits When Buying A Home
As a veteran who served in the United States military, you are eligible for home buying programs that non-veterans do not have access to. These programs are put into place to help veterans transition from renting to owning their property to provide a safe and comfortable living situation.
Costs associated with purchasing a home, such as closing costs and down payments, can be a severe financial burden and often are why many people continue renting. For many veterans, a VA loan is a great option to consider when considering programs to lower costs.
What is a VA Loan?
A VA loan is a loan specifically designed and allocated to veterans that served in any branch of the military. These loans are backed by the U.S. Department of Veteran Affairs although issued from a traditional private lender and are intended to assist veterans purchasing a home. The U.S. Department of Veteran Affairs insures these loans to allow the lender to give the homebuyer better interest rates without relying on high credit. The amount that is loaned out varies between buyers and lenders after taking into consideration their financial situation.
Since the program’s conception in 1944, thousands of veterans annually are allowed to pursue the homebuying dream. With ever-growing requirements for high credit needed for most home loans, a VA loan can be some veteran’s last hope. Flexible guidelines and the easy application process ensure the people that need a loan the most will receive aid in purchasing a home or refinancing an existing loan.
Benefits of a VA Loan
Unlike other home buying programs, a VA loan requires no down payment, typically costing thousands of dollars upfront. With no requirement of purchasing private mortgage insurance (PMI) or mortgage insurance premium (MIP), borrowers can avoid these fees over the entire span of their loan payments when receiving a VA loan. Because these loans are insured in-part by the U.S. Department of Veteran Affairs, there is limited risk for the loaner eliminating the need for additional insurance.
A VA loan is a phenomenal option for low-income veterans to purchase a new home as it requires no-money-down and continues to be affordable over time. Additionally, VA loans set a reasonable limit that lenders can charge for closing costs to reduce the financial strain on the homebuyer further. An additional start-up fee may be required for first-time homeowners, paid upfront or lumped into the loan amount’s total sum. Other “funding fees” may be required with a VA loan based on many different criteria specific to each loan. Exceptions are made for veterans receiving disability aid through the VA or non-married spouses of veterans who died during service or from complications from their service, requiring no funding free.
Eligibility for a VA Loan
Eligibility requirements to receive a VA loan considers many factors. First and foremost, applicants must meet the basic service requirements based upon their time served in the military. The service requirements can be explored thoroughly on the VA website for more information regarding your eligibility. It is important to note; however, you are not required to meet all requirements; instead, meet the requirements that best represent your service history.
- 90 days of active service during wartime
- 6 years of service in the reserves or National Guard
- 181 days of service during peacetime
- Spouse was killed during service and haven’t remarried
Certificate of Eligibility
Once you have decided to start the VA loan process, it is essential to apply for your eligibility certificate (COE) to prove to mortgage lenders that you are eligible for a VA loan. The COE can be issued extremely quickly and is usually done online through the VA eligibility authenticator portal. A COE is not required before applying for a loan, as this information can be confirmed rather quickly by most VA lenders. If you would like to apply for a COE without going through a lender, this can be done through the VA benefits portal or mail utilizing VA Form 26-1880.
Qualifying for a VA Loan
Qualification determination for eligible applicants is measured through income, debt, and credit score. While the VA has not set a minimum credit score to qualify for a loan, many VA lenders have their credit score requirements. Asking around between VA-approved lenders is the best way to find a lender that will issue a loan based on your specific credit rating. Typically, all applicants, despite credit score, must have paid all financial duties on-time for the previous 12 months before applying for a VA loan.
The VA wants to ensure the applicant can afford to purchase a new home by considering the debt-to-income ratio. This number is determined by dividing a veteran’s monthly income by the amount of money owed in bills each month. This number, referred to as the DTI, is one of the major deciding factors when qualifying for a loan.
Despite an applicant’s DTI, veterans may still qualify for a VA loan based on their income in relation to their residential area. The VA sets an income standard for all United States sections to give veterans the best chance at receiving benefits.
Veterans who work part-time must prove consistent work over the 2 years the previous applying for a VA loan. This is required to ensure the applicant is financially stable to afford mortgage payments and the rest of their living expenses. More information on VA loans can be found here: VA Home Loans Home.
Other Forms of Homebuying Assistance
While a VA loan may be specifically designed for veterans in need, there are many other programs out there to aid veterans in the homebuying process. Down payment assistance loans can prove extremely helpful in cutting costs readily available in all 50 states.
The U.S Department of Housing and Urban Development (HUD) specializes in helping low-income families and individuals make the journey into a new home with many options specific to veterans. More information on programs offered by the HUD can be found on their website. Veterans and HUD | HUD.gov / U.S. Department of Housing and Urban Development (HUD)
Researching and learning about the homebuyer assistance programs in your area can be extremely useful in determining which loan route is the best for you. If this article was helpful, you might qualify for free wireless service through the federal Lifeline program. You can check your eligibility now by clicking here. Free Cell Phone Service With Government Program | StandUp Wireless