A VA loan may be available to veterans and military personnel. These loans are great because they offer many benefits, including no PMI and no limits on the amount you can borrow.
However, it`s important to note that these benefits come with restrictions, so it`s important to find a lender who specializes in VA loans.
No PMI
Unlike other mortgages, VA loans don`t require private mortgage insurance (PMI). Buyers who have to make a down payment less than 20% for conventional mortgages will usually be required to pay PMI.
VA loans do not have PMI because the Department of Veterans Affairs supports these home loans and reduces the risk for 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 several types of VA loans, including a VA Purchase Loan, IRRL, Streamline Refinance and Cash-Out Refinance.
No Limits on Loan Amounts
You can finance as much as your lender will allow if you are a veteran, active-duty military member or active-duty soldier with full VA home loan entitlement. These loans are also 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. High-cost counties often have higher loan limits than those in less expensive 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.
Having a good credit score is one of the most important factors 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 on time and not maxing out your credit card accounts.
Another way to improve your credit score is by becoming an authorized user on someone else`s credit card account. This can be a good option for people with poor credit who are looking to build their credit score before applying for a VA loan.
No Down Payment Requirements
The best thing about VA loans is the fact that you don’t have to make a downpayment. 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.
Private mortgage insurance (PMI) is also available for conventional loans. This can tack hundreds of dollars onto 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.
If you are buying property with a higher than the VA loan limit for your county, you might also need to make a downpayment. The amount that you will need to deposit can vary depending on the lender`s rules, your entitlement and other factors. Ask a VA loan officer for assistance if you are unsure about the down payment requirements.