VA home loan benefits
If you’re a VA-eligible service member, you’re probably familiar with the many advantages of VA loans vs. Conventional loans, which include:
- No down payment
- Lower interest rates
- No private mortgage insurance (PMI) needed
- Flexible credit requirements
- Assistance in case of financial hardship
But beyond the basics, there’s so much more to explore. In this article, we’ll reveal the different ways VA loans can be used and debunk common misconceptions to help you maximize this well-deserved benefit for you and your family.
Types of properties you can buy with a VA loan
The VA home loan program aims to help Veterans achieve the American dream of homeownership by providing access to some of the best mortgage terms and conditions available. They can be used to finance various types of properties as a primary residence, including:
- Single-family homes (up to four units)
- Planned unit developments
- Condominiums (must be VA approved)
- Manufactured homes
How seller concessions work with VA loans
In addition to the substantial VA loan benefits, you may also save money by asking your seller to cover the cost of things that aren’t typically expected or required; these are referred to as seller concessions. Per the VA, it’s possible to negotiate seller concessions that include but aren’t limited to the following:
- Payment of your VA funding fee
- Pre-payment of your property taxes and insurance
- Gifts such as a television or microwave oven
- Payment of extra points to provide permanent interest rate buydowns
- Provision of escrowed funds to provide temporary interest rate buydowns
- Pay off credit balances or judgments on behalf of the buyer
VA loans allow seller concessions of up to four percent of the home’s selling price and don’t include payment of your closing costs or payment of points as appropriate to the market.
Refinancing with a VA home loan
If you’re an eligible veteran looking to pay off debt, pay for school or tackle a home improvement project, the VA lets you borrow up to 100% of your home’s value with a cash-out refinance loan to use however you want. A different option is an Interest Rate Reduction Refinance Loan (IRRRL). As its name suggests, this loan allows those with an existing VA loan to refinance it for a lower interest rate, potentially reducing monthly mortgage payments. Sometimes called “VA streamline refinance,” an IRRRL is popular because of its fast, simple application process.
Selling a home with a VA home loan
When you’re ready to move on from your current home to purchase your next one, it’s comforting to know that in most cases, your original VA loan won’t create any obstacles to closing the transaction. Like other mortgage settlements, the money made from the sale covers your remaining loan balance and closing costs. Any extra money goes to you, provided you’ve built up equity. However, selling shortly after buying can present challenges. In both situations, it’s helpful to consult a Guild loan officer who can help you navigate the finer points of selling with a VA home loan.
Using VA loan benefits more than once
Your VA loan entitlement can be used multiple times, letting you move from place to place without saving for a down payment repeatedly. But the number of entitlements available to you may vary based on many factors like previous VA loan usage and the loan limits in the area.
For eligible borrowers with full VA loan entitlement, VA loan limits don’t apply. If you don’t have other active VA loans and can afford the loan, the VA will back your loan regardless of the home price. Use Guild’s affordability calculator to get a good idea of your mortgage payments based on your income and what you can afford with your VA home loan benefits.
It’s crucial to understand how much you can borrow and what benefits you’re eligible for. The experts at Guild Mortgage can help you maximize your entitlements and make informed decisions based on your specific situation.
Common myths about who can benefit from VA loans
Despite the many VA home loan benefits, there are many misconceptions, especially regarding who can use them. Here are the most common myths we hear:
Fact: In many cases, surviving spouses of Veterans do qualify for VA loans. They first need a Certificate of Eligibility (COE) to apply for the benefit. Once received, a Guild loan officer can assist with the next steps.
Fact: While it is tougher to document income and financial stability, self-employed Veterans may qualify for VA loans.
Fact: As co-borrowers, children of Veterans can indirectly benefit from VA loans. By including the adult child of a veteran as a co-borrower on a VA joint loan application, the Veteran’s eligibility and some of the entitlement may be utilized, potentially making homeownership more accessible for the children of Veterans who may not qualify for Conventional loans on their own.
Guild Mortgage VA home loans that fit your life
We’ve been helping active duty and retired military personnel achieve homeownership for over sixty years. Whether you’re interested in a starter home, an investment property or a place to renovate and make your own, we’re here to help you at every step. Connect with a local loan officer to learn more.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.