Most homeowners have to borrow money before they can purchase a piece of property. Without a mortgage, it's unlikely that you have enough money to buy a house. Obtaining a mortgage, however, can take a lot of time and money. If you have served in any branch of the United States military, you could make the process easier by applying for a VA loan.
What is a VA Loan?
VA loans have a lot in common with typical mortgages. You borrow money to purchase a home, and you make monthly payments until you repay the debt.
VA loans, however, come with a lot of benefits that you rarely get from private mortgage lenders.
What Benefits Do VA Loans Offer?
Your VA loan gives you several benefits. For instance, most people who qualify for VA loans do not have to make down payments on their homes. Typically, lenders require a down payment of 3 to 20 percent. If you use a standard loan to purchase a $100,000 house, you can expect to pay at least $3,000 up front. With a VA loan, you don't need to spend time saving that money.
A VA loan also helps you avoid Private Mortgage Insurance (PMI). PMI protects lenders from loss by ensuring that they get paid even if you miss payments or fall into foreclosure. A bank or other private lender will charge PMI until you pay 20 percent of your home's equity. PMI usually costs 0.5 percent to 1 percent of your mortgage loan. By choosing a VA loan that lets you avoid PMI, you can save thousands of dollars per year.
Other benefits of using a VA loan include:
- Lower fees
- Assistance when you can't repay your loan
- Flexible guidelines regarding your income and credit score
Who Qualifies for VA Loans?
The VA has several requirements for who can get a home loan. Generally, though, you're eligible for a VA loan as long as you meet one of the following requirements:
- You served in active duty for six months
- You served as a reservist or National Guard member for six years
- You are a reservist or National Guard member who was called to active duty for at least 181 days
- You served in any branch of the military for 90 days during wartime
- You are the spouse of a military member who died during active duty
- You are the spouse of a military member who became disabled during duty
If you want to learn more about this kind of loan, you can visit the U.S. Department of Veterans Affairs website.