VA loans are designed to support service members, veterans, reservists, and qualifying surviving spouses in their efforts to buy, build, repair, retain, or adapt a home for their personal occupancy. Although the United States Department of Veterans Affairs (VA) guarantees these loans, they are offered by private lenders like PrimeLending. They’re a great option for qualifying homebuyers who are looking to buy or refinance. If you suspect that a VA loan may be the right option for you, PrimeLending can help you determine how to get the greatest benefit from your entitlement.
Conceived as a benefit for the men and women who serve our country, a VA loan comes with guidelines that protect both the rights and the wallet of the borrower. Whether you hope to buy a home that is move-in ready, build your dream home, put your personal stamp on a fixer-upper, cash in some of your equity, or refinance to secure a better mortgage deal, a VA loan is a possibility worth exploring.
Benefits of a VA Loan
What makes a VA loan so appealing? Because the VA backs the loan, reducing the risk for lenders, borrowers enjoy generous terms. VA loans offer many significant advantages:
- Borrowers can secure lower interest rates.
- The loan can finance up to 100 percent of the home’s value.
- The VA does not require a minimum credit score. Private lenders set their own requirements.
- No down payment is required as long as the purchase price doesn’t exceed the property’s appraised value.
- No private mortgage insurance is required.
- Borrowers cannot be charged a prepayment penalty.
- Closing costs are limited and may be paid by the seller.
- Additional VA benefits are available for disabled veterans.
- Borrowers who experience difficulties making payments can seek assistance from the VA.
- A VA loan is assumable, which can be an advantage if you decide to sell the property.
- The VA loan entitlement is reusable.
- With sufficient credit and entitlement, you can have more than one VA loan.
- While there is a limit on the VA’s guaranty, there is no maximum loan amount.
Requirements for Borrowers
While a VA loan can be a fantastic option for qualifying borrowers, it is not available to everyone. Both the borrower and the property must meet specific requirements to qualify for a VA loan.
First, you must be eligible for the home loan benefit. Eligibility is determined by factors like length of service or service commitment, duty status, and character of service. Then, you must obtain a valid Certificate of Eligibility to prove your entitlement. Finally, you must have sufficient credit and income to qualify for the loan.
Requirements for Properties
When a VA loan is being used to finance the purchase of a property, the property must be intended for the borrower’s personal occupancy. The property must also meet the guidelines set by the VA’s Minimum Property Requirements:
- The property must be free of hazards that would endanger its occupants or hinder their ability to use and enjoy the property.
- It must be a single, marketable piece of real estate.
- It must offer at least 75 percent residential space and include a bathroom and areas for living, cooking, dining, and sleeping.
- Its roof must be free of leaks, and all mechanical systems must be safe and sized appropriately.
- Its structure must be sound, clean, properly constructed, and free of common hazards.
Types of VA Loans
While a VA loan cannot be utilized to purchase a commercial or investment property, homebuyers and homeowners can use these loans to achieve a variety of goals. Which VA loan is right for you?
- A VA Purchase Loan can be used to fund the purchase of a home or VA-approved condo, to build a home, to simultaneously buy and renovate a home, or to purchase a farm. A VA loan can also be used to fund the installation of energy-efficient features and other improvements.
- A VA Cash-Out Refinance Loan can be used to refinance an existing loan into a VA loan. It can also be used to access the borrower’s existing equity.
- A VA Interest Rate Reduction Refinance Loan offers the chance to refinance an existing VA loan. Sometimes called a VA-to-VA or a Streamline loan, this type of loan is a great way to secure a lower monthly payment or a better interest rate.
Could a VA loan help you achieve your homeownership goals? To explore the possibilities offered by VA loans, contact PrimeLending today.