VA Home Loans With Low Mortgage Rates
As the U.S. economy improves, so do the mortgage choices available to today’s home buyers and refinancing households. There are now tens of home loans available to U.S. consumers.
For those meeting eligibility requirements, the optimal loan choice is often the VA loan.
VA loans allow 100% financing, never require mortgage insurance, and carry flexible underwriting guidelines which makes it easier for you to get to your closing on-time.
Furthermore, VA mortgage rates are often the lowest of all available loan types by a wide margin
If you’re shopping for a loan and considering the VA loan option, here are the answers to 10 popular VA loan questions.
1. What Is A VA Loan?
A VA loan is a special type of home mortgage that’s backed by the federal government, specifically the U.S. Department of Veterans Affairs (VA).
VA loans offer attractive terms and guidelines because the VA guarantees repayment of a portion of the loan to the lender even if the borrower defaults.
Made possible by the G.I. bill in 1944, VA loans are intended to help active-duty military servicepersons, veterans and others who are VA-eligible buy a home.
The VA loan is another way the nation recognizes your service.
2. Who Is Eligible For A VA Loan?
Not only veterans, but also other classes of military personnel are eligible for VA loans.
The list of eligible VA borrowers includes active-duty servicepersons, members of the National Guard, Reservists, surviving spouses of veterans, cadets at the U.S. Military, Air Force or Coast Guard Academy, midshipmen at the U.S. Naval Academy and officers at the National Oceanic & Atmospheric Administration.
A minimum term of service usually is required.
3. Do I Need A Downpayment To Get A VA Loan?
Most home loans require at least a small downpayment. VA loans are an exception.
Instead of making a downpayment, the VA lets you finance up to 100 percent of the purchase price of the home you want to buy. And you never have to pay for mortgage insurance.
Borrowers who get a conventional loan or an FHA loan, insured by the Federal Housing Administration, typically must pay an extra amount every month for mortgage insurance if they make a downpayment of less than 20 percent.
4. What Type Of House Can I Buy With A VA Loan?
A VA loan can be used to buy a detached house, condo, new-built home, manufactured home or duplex, triplex or four-unit property or to refinance an existing loan for those types of properties.
The VA also lets you borrow an extra sum to make repairs or improvements to the home; or, make it more energy-efficient.
5. Can I Use A VA Loan To Buy A Home In a Foreign Country?
No, you cannot use a VA loan to buy a home in a foreign country. Only homes located in the United States or a U.S. territory or possession, such as Puerto Rico, Guam or the U.S. Virgin Islands, are VA-eligible.
6. Can I Use A VA Loan To Buy a Rental Property?
No, you cannot use a VA loan to buy a rental property. You can, however, use a VA loan to refinance an existing rental home you once occupied as a primary home.
For home purchases, in order to obtain a VA loan, you must certify that you intend to occupy the home as your principal residence. If the property is a duplex, triplex or four-unit apartment building, you must occupy one of the units yourself.
The exception to this rule is via the VA’s Interest Rate Reduction Refinance Loan (IRRRL). This loan, also known as the VA Streamline Refinance, can be used to refinance an existing VA loan for a home where you currently live or where you used to live, but no longer do.
7. How Do I Demonstrate To A Lender That I’m Eligible For A VA Loan?
In order to show a VA mortgage lender that you are VA-eligible, you’ll need a Certificate of Eligibility (COE), which your lender can acquire for you online, usually in a matter of seconds.
The IRRRL is again an exception. For that loan, you won’t need a COE.
You’ll also need to meet standard VA loan requirements including income and employment verifications, and residual income requirements.
8. Does My COE Mean I Am Guaranteed To Get A VA Loan?
No, having a COE doesn’t guarantee a VA loan approval. Your COE shows the lender you’re eligible for a VA loan, but no one is “guaranteed” VA loan approval. You must still qualify for the loan based on VA mortgage guidelines.
The “guarantee” part of the VA loan refers to the VA’s promise to the lender of repayment if the borrower defaults.
9. My Credit Isn’t Perfect. Can I Get A VA Loan?
Yes, you can get a VA loan even without “perfect credit”. Many lenders use aggressive underwriting to help people who are VA-eligible receive loan approval, so you don’t need perfect credit or a high credit score to qualify.
If you have at least a middling credit score plus a history of paying your bills on time, you should apply for a VA loan.
10. Can I Get a VA Loan If I’ve Been Denied Other Financing?
Yes, you can get a VA loan even if you’ve been denied for other financing.
Because the VA loan offers such flexible guidelines, you might be able to qualify even if you’ve been turned down for another type of home loan, including the FHA loan, a Conventional 97 mortgage, or some other type of credit.