home isnít just a single decision. There are countless decisions
involved, starting with how youíll pay for a home. Before you figure
this out, everything else is a moot point.
no shortage of financing options, and the one you choose will have a
huge impact on the cost of buying and owning a home. Once you better
understand, the costs involved youíll have a better idea of whether
or not youíre
financially ready to buy a home.
loan options are available to just about everyone, while others are
reserved for particular individuals that meet requirements.
VA loans fall into the
latter category. The VA loan program is only available to veterans,
active service members and in some cases their spouses. If you
qualify for a VA home loan, it can make purchasing a home much less
expensive up front and over the long-term.
Do VA Loans Work?
VA loans are unique in that they
are guaranteed by the Department of Veterans Affairs (VA). This
means the VA protects lenders from loss, which makes lenders more
willing to lower their lending requirements for a borrower.
loan program is a part of the Servicemenís Readjustment Act (G.I.
Bill). It gives eligible veterans additional financing options and
makes ownership possible for more people because a down payment is
not required. Other benefits of using a VA loan include:
∑ No private
mortgage insurance payments.
competitive, fixed mortgage rates.
∑ Loans are
∑ Forbearance during
periods of financial hardship.
∑ There are no
∑ Lower income and
credit standards than conventional loans.
∑ Lower/limited loan
standard loan limit that the VA will guarantee is $417 000. However,
this can be increased in certain high-price markets like Hawaii and
California. The amount is based on the Federal Housing Finance
Agency (FHFA) annual conforming loan limit and whatís known as
entitlement is given to every eligible veteran. It guarantees
$36 000 of a home, and generally, lenders will give approval for
four times this amount. The bonus entitlement can cover the
remaining amount for loans over $144 000. Eligible veterans should
be aware that this is typically a one-time benefit if you use the
entire basic entitlement to qualify for a loan. The entitlement can
be restored if the home is sold or the loan is paid in full.
mind, you can qualify for a higher loan, but the VA will only
guarantee it up to a certain amount. But before you can take
advantage of a VA loan you have to make sure youíre eligible.
is Eligible to Participate in the VA Loan Program?
everyone who has served in the military will be eligible for a VA
loan. People who are potentially eligible include:
∑ Any member of the
Armed Forces thatís on current active duty in good standing.
∑ Anyone who has
served for 6+ years in the National Guard or Selected Reserve
and was honorably discharged or retired.
∑ Combat veterans
who were on active duty service between 90 days and 24 months
(time period depends on the qualifying wartime).
∑ An unmarried
spouse of a veteran who died or became disabled during service.
∑ Spouse of a
service member who went missing during action or is a prisoner
∑ Surviving spouse
who remarried after the age of 57.
are eligible, youíll have to receive a
Certificate of Eligibility before you can apply for a VA loan.
You can get the certificate by completing VA Form 26-1880.
be noted that there are a few additional requirements to qualify for
a VA loan. The borrower must intend to live in the home and have to
be living there within 60 days of closing on the loan. The one
exception is single service members who are on active duty. In these
cases, the borrower has up to 12 months to occupy the home.
Where Can I Get a VA Loan?
arenít actually made through the Department of Veterans Affairs. A
VA loan can be obtained through a lender that has been approved by
the VA to participate in the program.
VA-approved lenders understand the requirements and process of
handling a VA loan, which can be complicated at times. This helps
make the approval process easier and quicker. Lenders who are
approved by the VA also have the authority to accept VA loan
applications and process the loan without any outside parties
needing to be involved.
of these factors, itís in your best interest to consider only
VA-approved lenders if you want to use a VA loan.