If you`re a veteran or military service member, you may be eligible for a VA loan. These loans are great because they offer many benefits, including no PMI and no limits on the amount you can borrow.
However, it`s important to note that these benefits come with restrictions, so it`s important to find a lender who specializes in VA loans.
No PMI
Unlike other mortgages, VA loans don`t require private mortgage insurance (PMI). PMI is an extra fee that buyers usually have to pay on conventional mortgages that require a down payment of less than 20%.
VA loans do not have PMI because the Department of Veterans Affairs supports these home loans and reduces the risk for lenders.
No down payment and low interest rates are just a few of the benefits that make VA loans a great choice for many homeowners.
You can buy a house with a VA loan. However, you can also refinance an existing non-VA mortgage to a VA loan. There are several types of VA loans, including a VA Purchase Loan, IRRL, Streamline Refinance and Cash-Out Refinance.
No Limits on Loan Amounts
You can finance as much as your lender will allow if you are a veteran, active-duty military member or active-duty soldier with full VA home loan entitlement. These loans are known as VA Jumbo Loans.
The new Blue Water Navy Vietnam Veterans Act eliminated the old guaranty limits on full VA loan entitlements for eligible borrowers. To be eligible for the loan, however, you will still need to meet certain lender requirements.
Additional requirements may be required, such as income, credit score and debt-to–income (DTI), ratios. Check with your lender to learn about these guidelines.
The conforming loan limit in your county determines the maximum VA mortgage amount. Loan limits in high-cost counties are often higher than those in lower-cost areas.
There are no credit score requirements
The VA doesn`t set a minimum credit score for its loans, but individual lenders may. Lenders will look at the full loan profile of an applicant and consider their credit history, debt-to-income ratio, and income before making a decision.
A good credit score is a key factor in getting approved for a VA Loan. Having a healthy credit score will help you get a lower interest rate and save you money over the life of the loan.
There are steps that you can take to improve your credit score if you have poor credit. These include paying your bills on time and not maxing out your credit card accounts.
Another way to improve your credit score is by becoming an authorized user on someone else`s credit card account. This can be a good option for people with poor credit who are looking to build their credit score before applying for a VA loan.
No Down Payment Requirements
One of the biggest perks of VA loans is that you don`t need to make a down payment. This is a major selling point, as conventional mortgages require that borrowers make a down payment of at least 20% of the purchase price.
In addition, conventional loans are backed by private mortgage insurance (PMI). This can tack hundreds of dollars onto your monthly payment.
There are certain situations when you might need to make a downpayment. For example, you might be required to put down money if the home you`re buying appraises lower than your agreed-upon purchase amount.
You also might need to make a down payment if you`re buying a property that`s more than the VA loan limit in your county. The amount you`ll need to put down can vary depending on your remaining entitlement, the lender`s rules and other factors. If you`re unsure about your down payment requirement, ask a qualified VA loan officer for help.