If you`re a veteran or military service member, you may be eligible for a VA loan. These loans offer many great benefits including no PMI and no limit on the amount that you can borrow.
It is important to remember that these benefits have limitations, so it is important to find a lender who specializes only in VA loans.
No PMI
VA loans are not subject to private mortgage insurance (PMI) like other mortgages. PMI is an extra fee that buyers usually have to pay on conventional mortgages that require a down payment of less than 20%.
The reason VA loans don`t have PMI is that the Department of Veterans Affairs backs these home loans, reducing the risk to lenders.
No down payment and low interest rates are just a few of the benefits that make VA loans a great choice for many homeowners.
You can buy a house with a VA loan. However, you can also refinance an existing non-VA mortgage to a VA loan. There are many types of VA loans available, including a VA Purchase Loan (IRRL), Streamline Refinance, Cash-Out Refinance, and Streamline Refinance.
No Limits on Loan Amounts
If you are a veteran or active-duty service member with full VA home loan entitlement, you can finance as much as your lender will underwrite. These loans are known as VA Jumbo Loans.
The new Blue Water Navy Vietnam Veterans Act eliminated the old guaranty limits on full VA loan entitlements for eligible borrowers. To be eligible for the loan, however, you will still need to meet certain lender requirements.
You may also need to meet additional requirements such as credit score, income and debt-to-income (DTI) ratios. These guidelines can be discussed with your lender.
The conforming loan limit in your county determines the maximum VA mortgage amount. Loan limits in high-cost counties are often higher than those in lower-cost areas.
There are no credit score requirements
Although the VA does not require a minimum credit score to be eligible for loans, individual lenders may. Before making a decision, lenders will examine the complete loan profile of a applicant, including their credit history, income, and debt-to-income ratio.
A good credit score is a key factor in getting approved for a VA Loan. A healthy credit score can help you save money and get a lower interest rates over the life of your loan.
If you have low credit scores, there are steps you can take to rebuild your credit score. These include paying your bills in time and not maxing your credit cards.
You can also improve your credit score by becoming an authorized user of another credit card account. This is a great option for those with bad credit and who want to improve their credit score before applying to for a VA loan.
There is no down payment required
One of the biggest perks of VA loans is that you don`t need to make a down payment. This is a huge selling point because most conventional mortgages require borrowers to come up with a down payment that amounts to at least 20% of the purchase price.
In addition, conventional loans are backed by private mortgage insurance (PMI). This can add hundreds of dollars to your monthly payment.
There are certain situations when you might need to make a downpayment. If the appraised value of the house you are buying is lower than your agreed-upon purchase price, you may be required to make a down payment.
You also might need to make a down payment if you`re buying a property that`s more than the VA loan limit in your county. The amount you`ll need to put down can vary depending on your remaining entitlement, the lender`s rules and other factors. Ask a VA loan officer for assistance if you are unsure about the down payment requirements.
