The VA Loan, A Military Benefit You Should Use

The VA Loan

The VA Loan, A Military Benefit You Should Use

As a service member or veteran, you have a very important benefit you can use to help your family, the VA loan. The VA Home Loan program has been available for more than 75 years now. And can be a good way to get into a home of your own.

About the VA Loan

The VA Home Loan program started in 1944 as a part of the original Servicemen’s Readjustment Act. The goal of the VA loan was to level the playing field for those who served our country during WWII.

The loan can be used to buy, build, or refinance a home. It can save the veteran or service member a lot of money and allow them to purchase a home before they might otherwise be able to do so.

Finding a Good Realtor

It’s important with a VA loan that you find a good realtor that knows about VA loans and has worked with plenty of people who have had them in the past. You also want your lender to be comfortable with them too. Going with a realtor or lender with that knowledge as well as being familiar with military life means they can point out things in a house that could disqualify you from a VA loan as well as understanding your unique needs because of your military life.

No Down Payments

One of the benefits of a VA loan is that you don’t need to have a down payment. At least in most cases. As of January 1, 2020, the Blue Water Navy Vietnam Veterans Act of 2019 made changes so that there will no longer be loan limits. Loan limits are the maximum amount of money you can borrow using a VA backed loan without having to pay a portion of the home’s total sale price upfront which is the downpayment. The limit is not a cap on how much you can actually borrow. This change allows veterans and service members in higher-cost markets to buy the home of their choice, no matter the price, without needing a down payment.

There will however still be loan limits for those with more than one active VA loan, those who only have partial entitlement available, or those who have defaulted on a previous loan.

VA Funding Fee

There were also some changes with the VA Funding Fee as of January 1, 2020. For active duty service members, and veterans, it increased by .15%, making the total of the funding fee 2.3% of the loan. The funding fee will be higher for those on their 2nd or subsequent use of the benefit. You can roll this into your mortgage but in most cases will have to pay this fee.

If you make at least 5% of a down payment on your loan, your funding fee will be lowered to 1.65% and if you make at least 10% or more of one, it will be lowered to 1.4%. Veterans who receive VA compensation for a service-connected disability do not have to pay the funding fee. And, as of 2020, active duty service members who have received a Purple Heart can avoid the fee as long as they close on a home while they are still active duty.

Other VA Loan Tips

  • You won’t need to buy PMI (private mortgage insurance) even if you don’t have a down payment, or your down payment is less than 20% like you do with typical loans.
  • It is important to know what a VA loan is and what it isn’t. Know that the VA doesn’t make the loan. You would get your VA loan through a bank or financial lender. The VA guarantees the loan. You also need to meet different qualifications to get the loan and be able to afford the payments.
  • Your VA loan benefit doesn’t expire.
  • You can use your VA loan benefit multiple times.
  • Don’t be afraid to ask questions about your VA loan, before, and during the process.

The VA loan is a benefit you should use if you qualify for it. You can use it at your next duty station or on a forever home. The VA loan will allow you an easier path into homeownership.

RELATED:

 

About the author

+ posts

Julie Provost is a freelance writer, blogger, and owner of Soldier's Wife, Crazy Life, a support blog for military spouses. She lives in Tennessee with her National Guard husband and three boys.