A VA Loan or VA mortgage loan (also may be known as a Veterans Administration home loan) is by far one of the most useful military benefits for all members of our military. If you do qualify, you can then buy or opt to build a home, or opt to refinance an existing home mortgage, with as little as zero down, with great rates, and financing of up to $484,350 (2019 limit) – It could be more if you live in a variety of high-cost areas like New York City. Another benefit for Vets over a traditional mortgages is that there is no Private Mortgage Insurance or “PMI” (PMI or Private Mortgage Insurance is the monthly insurance fee that is charged to protect the bank against your default until you reach at least 20 percent equity).
For most of the service-members and veterans who qualify, a VA loan is one of the most valuable benefits and a no-brainer over other, traditional mortgage types. It is amazing that some former service people do not know all of the benefits that are due them and understanding the VA home loan benefit will be extremely valuable. This article offers an in-depth review of the VA Home loan process, and will give you instructions on how to submit an application.
VA Loan Basics
While VA Loans are issued by private lenders they are backed by the U.S. Department of Veterans Affairs, which is why they can be offered oftentimes with little to no down payment and no PMI. Since 1944, the VA has helped over 22 million military men and women purchase homes using this type of mortgage program.
VA Loan VS. Conventional Home Loans
VA loans are some of the only loans remaining that offer no down payment. With conventional loans, the buyer is required to provide up to 20% down, which can often make it too difficult to purchase the right type of home for your family. Since with a VA home loan there’s no private mortgage insurance this can save hundreds of dollars a month over conventional loans, depending on how much you borrow. Because the VA loan is backed by the government, the rates are often much better than a conventional loan, which will save you a considerable amount of money over the life of your home loan. Lastly, the VA home loan has a more lenient lending policy, allowing you to qualify for a VA loan when you might not meet all the requirements for a traditional loan.
VA Loan Funding Fee
Nearly every VA loan comes with a VA Funding Fee. This fee goes directly to the Department of Veterans Affairs and helps back the VA loans of the future. Not everyone has to pay the fee, such as military men and women with a service-related disability. Fees range from a little over 2% for first time VA loan recipients, to 3.3% for repeat home buyers. The good news is you can roll this fee into your loan amount. In addition, closing costs are less and often the seller can pay these costs, too.
VA Loan Limits
As of 2019, the VA allows for no down payment on loans up to $484,350. This does not mean that’s all a veteran can qualify for, it means that’s the limit in most cities you can secure a mortgage with no down payment. In cities that are more expensive to live in, that number rises. The complete list VA home loan limits by city is available here. For example, in New York City the maximum you can qualify for with no down payment is over $726,000.
How Much Can I Qualify for on a VA Loan?
The amount you can qualify for varies depending on a number of factors. One of the biggest factors is your debt ratio. It helps to determine the amount you can afford to pay each month. Here’s the scoop on how to calculate what you qualify for with a VA loan.
Take the Next Step
If you’re ready to move forward, or just want more information, the first step is to get no-obligation rate quotes.
Most borrowers, whether they are purchasing property or refinancing their home, focus on their mortgage rate and loan terms rather than the type of lender