A VA loan is essentially a type of mortgage loan in the U.S. guaranteed by the United States Department of Veterans Affairs (VA). The VA loan program is specifically for U.S. veterans, military members currently serving in the military, reservists, and select surviving spouses (provided they do not remarry). You can use VA loans for the purchase of single-family homes, condominiums, multi-unit properties, manufactured homes, and new construction.
No Down Payment
If you’re a veteran considering a VA loan, you may wonder if you need a down payment. The answer is no! VA loans are available to eligible veterans and active duty service members with no down payment required.
This is a pretty huge advantage over other types of loans since most homebuyers are expected to save up to 20 percent for the down payment. And often, homebuyers can miss out on a good housing market just because they haven’t saved enough for the down payment. But for VA loans, you won’t have to worry about the down payment anymore.
No Private Mortgage Insurance
With a VA loan, one of the many benefits you’ll enjoy is that you won’t have to pay for private mortgage insurance (PMI). This is a huge advantage, as PMI can add hundreds of dollars to your monthly mortgage payment. But without a PMI, you can save a significant sum of money over the life of your loan.
Better Interest Rates
You may wonder if you can get a better interest rate than a traditional loan. The answer is yes! VA loans typically offer lower interest rates than conventional loans, making them a great option for veterans looking for a home loan.
There are a few reasons why VA loans offer better interest rates than conventional loans. For one, VA loans are backed by the federal government, which gives VA loan lenders confidence that they will be repaid even if the VA loan borrower defaults. This makes VA loans less risky for lenders, and they can offer lower interest rates as a result.
Another reason VA loans offer better interest rates is that they are available to active-duty military members, veterans, and their families. Lenders view these groups as low-risk borrowers, so they are willing to offer lower interest rates.
Relaxed Credit Requirements
There is no minimum credit score required for a VA loan. However, lenders will still pull your credit history and may require a minimum credit score. This minimum score is often 620, but some lenders may accept a credit score as low as 580. Lenders may also require a good payment history on other debts, such as auto loans and credit cards.
If you have relatively bad credit, you may still be able to qualify for a VA loan. The VA has a program called the Credit Veterans Assistance Program (CVAP) that can help Veterans with bad credit improve their credit scores.
In conclusion, VA loans are a great option for veterans. They offer low-interest rates, no down payment requirements, and no monthly mortgage insurance premiums. Additionally, VA loans have more relaxed credit requirements compared to other types of loans.
Apply for a VA Loan with the help of Total Lending Concepts. We offer home loans to fit every situation — whether you are a first-time homebuyer searching for your first home or ready to buy that dream home you’ve had your eye on. We are experts at VA loans and get them done smoothly and quickly. Apply now!