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Benefits to a VA Loan

1. No Down Payment

With a VA loan, you could finance the entire purchase price of the home and not have to come up with a down payment. That’s a huge advantage for first-time buyers who may not have the savings required for other types of home loans.

2. You can get help with your closing costs.

Another common obstacle for first-time homebuyers is coming up with the cash needed to cover closing costs. These are the fees charged by lenders and third parties for services related to your loan and home purchase, such as appraisals, title and escrow fees, recording fees, notary, etc..

While you can’t get a VA loan to pay your closing costs outright, you can have the seller pay them for you as part of your negotiation. According to VA guidelines, the seller can contribute up to 4% of the home’s value toward these costs — which can be a big help when you’re trying to save money for repairs, appliances, and furntiture.

3. You won’t have to pay for private mortgage insurance (PMI).

Another way VA loans help you save money is by exempting you from paying for private mortgage insurance (PMI). PMI is a type of insurance that protects the lender in case you default on your loan. It’s typically required if you put less than 20% down on a conventional loan, but it doesn’t apply to VA loans.

This can be a huge savings, especially if you’re a first-time homebuyer. For example, let’s say you put 5% down on a $250,000 house with a conventional loan. Your PMI premium would could be anywhere from $50 to $125 per month depending on credit score. That adds up to $600 – $1500 per year until you have 20% equity in your home.

4. You can qualify with less-than-perfect credit.

If you have less-than-perfect credit, you may still be able to qualify for a VA loan. That’s because VA loans are designed to help those who have served our country — many of whom may have less-than-perfect credit as a result of their service. There are still minimum credit standards that need to be met, but the requirements are less strict than other loan programs.

So if you have poor credit, don’t give up on your dream of homeownership just yet. A VA loan could be the perfect solution for you.

5. You can get a VA loan even if you have a bankruptcy or foreclosure in your past.

If you’ve filed for bankruptcy or had a foreclosure in the past, you may still be eligible for a VA loan. That’s because the VA understands that these things can happen — and they don’t want to penalize those who have served our country as a result.

So if you have a bankruptcy or foreclosure in your past, don’t assume that you won’t be able to get a VA loan. Talk to a lender about your options.

Here are the basic requirements for a bankruptcy:

  • Chapter 7 – must wait until 2 yrs have lapsed since the discharge
  • Chapter 13 – must wait until 12 months have lapsed since the first payment

Foreclosure and short sale:

  • Must wait until 2 years have lapsed since the foreclosure

6. You can use a VA loan to buy a condo.

One common misconception about VA loans is that you can only use them to purchase a single-family home. That’s not true — you can actually use them to buy a condo as well.

The only caveat is that the condo must meet certain requirements, such as being on an approved list maintained by the Department of Veterans Affairs.

So if you’re looking for a condo, be sure to check the VA’s list of approved condos before you start your search. That way, you can be sure that you’ll be able to get a VA loan for the unit you want to buy.