With over 21 million veterans nationwide potentially able to qualify for a VA loan, we are currently seeing 20-year highs of individuals and families applying for VA loans. In the first quarter of this year alone, VA loans accounted for over 8 percent of the loan market. This proves that veterans across the country are taking advantage of the relatively home loan interest rates and the overall housing market recovery.
History of VA Loans
President Franklin D. Roosevelt signed the G.I. Bill of Rights back in 1944 and, from this bill, veterans gained access to college tuition assistance, unemployment benefits, business loans and mortgage assistance. From fighting for America’s Freedom to realizing the American dream of homeownership, veteran’s deserve the assistance that obtaining a VA loan provides.
As a result of the G.I. Bill, VA loans are guaranteed by the federal government. Throughout the 70 years of the program’s existence, it has helped over 20 million veterans be able to obtain affordable home financing.
A VA loan is backed by the Department of Veterans Affairs (VA) to veterans who qualify based on their eligibility as an active-duty person, veteran, Reservist/National Guard member and some surviving spouses. Those eligible for a VA loan can qualify for the loan for the purchase of their primary residence.
Advantages of a VA Loan:
• No private mortgage insurance (PMI)
• $0 money down
• Easier to qualify
• Competitive/negotiable interest rates
• No prepayment penalty
Veterans have access to some of the best loan programs in the country. Any mortgage lender that participates in the VA home loan program can work with someone to obtain a VA loan. In order to qualify with the lender, a veteran will need to supply a Certificate of Eligibility (otherwise known as a COE) from the Department of Veterans Affairs. This document provides evidence to the lender that they are eligible for a VA loan. It is also possible for the lender to obtain a Certificate of Eligibility on behalf of their clients. Anyone can learn more about VA loans and download a Certificate of Eligibility application from the VA by clicking here.
VA Loan Limitations
With no money down, an eligible veteran can apply for a loan up to $417,000. And, in some locations across the country with high costs of living, this amount may reach up to $1,094,000. The county of the home securing the loan will be the determining factor as counties have specific maximum limits.
FHA vs. VA Loan
Compared to an FHA loan which allows a qualified individual to obtain a loan with as little as 3.5 down payment, the VA loan is a great option with zero down. Statistics have shown that approximately 90 percent of VA mortgages have been acquired with zero down payment. Do keep in mind that credit is still a large part in qualifying for a VA home loan as most lenders require a minimum of a 620 FICO score.
There are currently over 2 million VA loans in existence today with the value of balances in excess of $370 billion according to Bloomberg. A VA loan does have unique advantages over a traditional mortgage. If you qualify for a VA loan, then it is certainly something worth pursuing. A VA loan is a fantastic way to follow the path of homeownership.
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