There are many great reasons for borrowers to purchase a new home with a VA loan. This type of financing makes the home-buying process simpler by providing multiple benefits to the borrower, including relaxed eligibility requirements. These loans are specifically for veterans and men and women currently serving in the military.
This Type of Financing Helps Homeowners Save Money
Unlike other types of home loans that can require large down payments, this type of financing does not require the borrower to make any down payment on the home that he or she is buying. The absence of this typical requirement automatically saves the borrower money that can then be used for other expenses associated with buying a new home.
Usually, home loans require that the borrower pay mortgage insurance on the loan to cover costs in the case of default, but this type of financing does not require the borrower to pay any mortgage insurance. The VA guarantees repayment of these loans, so the lender is still protected in the event of a default. The absence of mortgage insurance also saves borrowers a great deal of money that they can use toward all of their other expenses.
These loans tend to have lower interest rates than many other types of home loans. With a lower interest rate, homeowners can obtain a lower monthly mortgage payments. Homeowners can save thousands of dollars and have more money available each month that they can put toward their other bills.
VA Loans Have Lenient Qualifications
The VA does not require borrowers to have certain credit scores or large incomes in order to qualify for this type of financing, but borrowers must have gone at least twelve months without having any delinquent payments in their credit histories. Many lenders will require that a borrower have a credit score of at least 620 to qualify. Borrowers also have to meet maximum debt to income ratio and minimum residual income requirements, (which vary based on family size and location) to show that they will be able to make their monthly payments.
Because these loans are solely for veterans and current members of the military, borrowers must also meet service length requirements, which vary based on year of enlistment and certain other factors. Veterans must have been discharged under conditions other than dishonorable to be eligible for this loan. In certain cases, spouses of veterans may also qualify for this type of financing.
Buy Your New Home with a VA Loan!
These loans can save homeowners thousands of dollars, which is great news for first-time home buyers who are just starting out or for veterans returning home who want to simply get back to everyday life. First-time home buyers can also take advantage of the first-time homebuyer's tax credit along with their VA loans and receive up to $8000 in tax credits! This incentive will be over at the end of April, so first-time home buyers should act now to save even more money with their new homes!
Victoria Belle-Miller is the newest member of the VeteransLoans.com writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the VA loans team and a valuable source of sound mortgage advice.
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