In special circumstances, a homeowner may be eligible for a VA home loan from the U.S. Department of Veterans Affairs.
What is an VA Loan?
The U.S. Department of Veterans Affairs offers eligible homeowners VA home loans to help them finance their home. The loan is provided by a private lender and the VA guarantees part of the amount. As with an FHA loan, this governmental insurance allows lenders to offer the borrower more favorable lending terms because it reduces the risk of the loan.
Who qualifies for a VA home loan?
VA loans are reserved for military service members, veterans and eligible surviving spouses. You do not need to be a first-time home buyer to be approved. According to the VA, to qualify for this mortgage you must have a good credit score, sufficient income and a valid Certificate of Eligibility (COE). The COE confirms to a lender that you are qualified for a VA-backed loan.
- Necessary evidence: The evidence needed to qualify for a VA loan will vary depending on your classification. For instance, a veteran will need different documents compared to an active duty service member, as will a discharged member of the National Guard who has never been activated for Federal Active service, for instance.
- Service requirements: A VA loan can only be offered to someone who was discharged under conditions other than dishonorable. The VA also has minimum active duty service requirements. Finally, the spouse of a veteran can apply for this type of loan as long as he or she is a surviving spouse of the veteran and has not remarried.
Why consider this type of mortgage?
- No down payment: Unlike other mortgage options, you will not have to pay a down payment for a VA loan as long as the home's sale price is at or below the appraised value.
- Low interest rate: The government's backing of the loan allows lenders to offer you more flexible approval requirements, including a very competitive interest rate.
- Easier to qualify: Similarly, qualifying for a VA loan is easier than other types of mortgages because it comes with fewer restrictions. For instance, your debt-to-income ratio can be higher and your credit score can be less than perfect.
- Limits on closing costs: Rules surrounding VA home loans restrict the amount you can be charged for closing costs.
- Financial help: The VA offers financial counseling if you're having temporary difficulties, and it may be able to provide assistance if you find yourself struggling to make payments.
- Easy to refinance: The VA has programs that make the loan easy to refinance with reduced documentation.
If you're interested in obtaining a VA loan from Thompson Kane, apply today!