Where do we begin? If you qualify for a VA home loan, here are the main ways your route to getting a home loan may be significantly easier compared to the conventional mortgage:
No Down Payment
90 percent of VA loans come with a 0 percent down payment – one of the last 0 percent down home loans left. On the other end, traditional loans require at least 5 percent – and up to up to 20 percent – down. This takes years of discipline and saving for traditional homebuyers.
No Private Mortgage Insurance
There is no requirement for you to buy private mortgage insurance (PMI) with any VA loan because you’re already guaranteed by the government. With traditional mortgages, lenders need homebuyers to pay for PMI if they’re financing more than 80 percent of their home’s value. This advantage saves you hundreds of dollars each month.
Qualifying and Securing Lower Interest Rates
With VA loans backed by the government, lenders can extend much lower interest rates compared to non-VA loans. You’re seen as much less of a risk to gamble on because of your guarantor, so the strict qualifications procedures most homeowner hopefuls have to consider don’t apply to you. How much lower could interest rates fall? Most websites suggest you’ll snag about 0.5 percent to 1 percent lower than conventional interest rates, but this could vary according to each lender, so it’s worth shopping around to compare rates.
Am I Eligible for a VA Home Loan?
This great vehicle to secure a low-interest, down payment-free home loan is set aside for a key segment of the U.S. population: U.S. veterans, active duty service members, National Guard members, and reservists.
The full list of eligibility requirements for veterans and service members are listed on the government website, but here’s a quick summary (you must meet at least one condition to qualify):
- If you have served at least 90 days of active service during wartime, including WWII, the Korean War, the Vietnam War, the Gulf War, or if you’re on active duty now
- If you have served 181 days of active service during peacetime, including post-WWII, post-Korean War, or post-Vietnam war
- If you served for 24 continuous months or the full period for which you were called to active duty between September1980 and August 1990, or between 1981 and 1990 if you served as an officer
- If you served more than six years in theNational Guard or the Reserves during any time period (but you must have been discharged honorably, placed on the retiree list or transferred to the Standby Reserve
If you don’t fit these immediate criteria, don’t fret. The Veteran Affairs website lists other routes to securing a VA home loan. If you were discharged for other reasons, including hardship, reduction in force, medical conditions, or a service-connected disability, you may still be eligible. Read the full guidelines on eligibility here.
What is a Certificate of Eligibility (COE)?
A Certificate of Eligibility (COE) is the key to getting your VA home loan. It shows your lender you qualify for a VA-backed loan and allows you to reap the benefits of the program.
In order to apply for a COE, you’ll need a copy of quick payday loan Minnesota your discharge or separation papers (DD214) if you’re a veteran, current or former activated National Guard or Reserve Member.
Active-duty service members will need a statement of service, signed by your commander, adjutant, or personnel officer showing your full name, social security number, date of birth, the date you entered duty, duration of any lost time, and the name of the command providing information.
