Available to United States, veterans, service members and not remarried spouses, a home mortgage loan from the Department of Veterans Affairs (VA) is a smart option for becoming a homeowner.
These mortgages do not always require a down payment and have no minimum credit score requirement. Available to millions of veterans and active military members, VA loans have easier qualifications than conventional mortgages.
Here are five key considerations you should be aware of before applying for a VA loan.
1. No Private Mortgage Insurance
Private Mortgage Insurance (PMI) is a requirement for borrowers who finance more than 80% of their home’s value. Fortunately, VA loans are government backed, meaning you are not required to by PMI.
2. Backed By the Government
Conventional loans from banks and other institutions hold stricter qualifications and procedures than can but homeownership out of reach for some buyers, particularly for those who poor credit. Banks assume less risk and have relaxed qualification standards for VA loans as they are all backed by the government.
3. Competitive Interest Rates
As mentioned before, banks are taking more of a risk offering mortgage loans without government backing. The VA gives lenders a greater degree of safety and flexibility, directly translating to a more competitive interest rate.
4. There is no cap to the amount you can borrow
However, there are limits, of course. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a down payment. Loan limits also vary by county.
5. Financial Assistance
Lastly, if the borrow is in danger of defaulting on their monthly payments, or can’t make mortgage payments, the VA can negotiate on behalf of the borrower to the lender. The VA has experienced financial counselors to negotiate repayment loans, modifications, and alternatives.