VA-backed home loans: don’t miss out on this important benefit

February 10, 2021

I first learned about VA home loans while I was still active-duty military, and was reminded of this benefit as part of my separation briefings when I retired. VA Home Loans are provided by private lenders, such as banks and mortgage companies. VA doesn’t actually make the loan, but guarantees a portion of the loan, enabling the lender to provide you with more favorable terms. Apart from the Texas Veterans Land Board loan program (please see my other blog for that program), I know of no better loan programs for veterans.

Aside from being a veteran, there are some other requirements to be eligible for a VA home loan, including:

·      You must qualify for a VA-backed home loan Certificate of Eligibility (COE), and

·      Meet VA’s—and your lender’s—standards for credit, income, and any other requirements, and

·      Will live in the home you’re buying with the loan

 Find out if you qualify for a VA-backed home loan Certificate of Eligibility (COE)

So, what are the benefits of getting a VA-backed purchase loan? Here are the biggest ones:

·      No down payment as long as the sales price isn’t higher than the home’s appraised value (the value set for the home after an expert reviews the property)

·      Better terms and interest rates than other loans from private banks, mortgage companies, or credit unions (also called lenders)

·      The ability to borrow up to the Fannie Mae/Freddie Mac conforming loan limit on a no-down-payment loan in most areas—and more in some high-cost counties. You can borrow more than this amount if you want to make a down payment.
Learn about VA home loan limits

·      No need for private mortgage insurance (PMI) or mortgage insurance premiums (MIP) PMI is a type of insurance that protects the lender if you end up not being able to pay your mortgage. It’s usually required on conventional loans if you make a down payment of less than 20% of the total mortgage amount. MIP is what the Federal Housing Administration (FHA) requires you to pay to self-insure an FHA loan against future loss.

·      Fewer closing costs, which may be paid by the seller

·      No penalty fee if you pay the loan off early

Application for a VA-backed home loan is pretty straight forward:

VA loans are obtained through a lender of your choice once you obtain a Certificate of Eligibility (COE). You can obtain a COE through eBenefits, by mail, and often through your lender. Learn More