Is a VA Loan the Best Option for You?
A VA loan is among the best designed option to benefit a select few: borrowers who are eligible veterans or active-duty U.S. military servicepersons, or have served the U.S. in other specific capacities. The benefits of a VA loan include:
Zero down payment. With a VA loan, you can finance the entire purchase price or full value of the home, whichever is less – up to 100 percent – of your new home. No down payment is required.
No mortgage insurance. The U.S. government guarantees a portion of every VA loan, and you don’t need to pay for private mortgage insurance even without a down payment. That saves you money each month.
No prepayment penalty. You can pay off or refinance a VA loan
without any penalty. That means you won't have to pay out of pocket if you decide to sell your home or refinance your loan before the end of the term.
Affordability. VA limits the fees that can be charged in closing costs that can save you money when you buy a home or if you refinance your existing home loan, the rules allow the costs to be financed into the loan. They also allow the seller of the home you want to buy to pay some of your closing costs.
Energy Efficient Mortgages. The VA also offers loans that allow financing the cost of making energy efficiency improvements to your home up to $6,000.
Beyond these major benefits, the VA backs both home purchase mortgages and refinance mortgages, so a VA loan can be used for either purpose. Similarly, they apply to the purchase or refinance of a single family house or condo, multi-family home up to four units, or a manufactured home, offering you the flexibility to choose the right home footprint for you.
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The Benefits of a VA Entitlement Explained
As a veteran, active military member, or reservist, your VA home loan entitlement is a powerful benefit. Here’s how you can put it to work for you:
In basic terms, the entitlement is the guaranty amount that the VA will repay to a lender if the borrower defaults on their mortgage. In most cases, the lender requires 25% guaranty of the loan amount, and each qualifying veteran can access their entitlement benefit when they apply for a loan.
Remember that qualifying veterans can:
- Use a portion or all of their available loan guarantee entitlement
- Use their entitlement when purchasing a home with their non-veteran spouse
- Split the use of their entitlement into unique halves if each is a qualifying veteran so both may be on the title and loan
- Use the other half of their entitlement on another property if they choose to only use half
- Only use half their entitlement if purchasing a property with a non-spouse companion such as a friend or other relative
Need to know even more about VA entitlements? Reach out and talk with a loanDepot Licensed Lending Officer today to learn more and see how you may qualify.
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Answers to Your Most Commonly Asked VA Loan Questions
As the nation’s fifth largest VA lender, we assist customers with their VA loan questions every day. Here are some of the ones we are asked most often? Don’t see your question here? Please email us at social@loandepot.com and we will get you the answers you need.
Am I eligible for a VA home loan?
Most active service members and honorably discharged veterans who meet the minimum active duty requirements and have suitable credit and sufficient income are eligible for a VA home loan. 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 are also eligible. A valid Certificate of Eligibility (COE) must be obtained from the VA. For more information on whether you meet the requirements, visit benefits.va.gov.
What kind of house can I buy with a VA loan?
A VA loan can be used to buy a detached house, condo, new-construction home, manufactured home (such as a mobile home), duplex, triplex or four-unit property or to refinance an existing loan for those types of properties.
How much can I borrow with a VA loan?
The VA allows financing up to 100 percent of a home’s value, so you can buy a home with zero down payment. Lenders generally limit the maximum VA loan to $424,100 for single-family home except in markets where conforming loan limits are higher, such as the San Francisco Bay Area and several other locations, where VA loan limits are $636,150.
Can I take cash out with a VA loan?
As long as you meet the debt-to-income ratio requirements and your home has the required amount of equity, then yes, you can pull cash out through a VA refinance.
Is a surviving spouse eligible for a VA home loan?
The surviving spouse of a veteran killed in active duty or who died from a service-connected disability is eligible for a VA loan. However, children are not.
I already have a VA loan. Can I get another?
If you currently have a VA loan, you can only take out a second VA loan if you’ll use it to pay off the current one (as in a refinance). If you’re selling your home and the funds will be used to pay off your existing VA loan, then you can buy a new home with a VA loan. The VA will not back two loans to the same borrower simultaneously, except under special circumstances, such as a relocation. If you’re relocated by the military and you want to keep your first home, you can use a VA loan to finance your new primary residence.
A veteran can use their VA loan benefit as many times as needed to refinance their primary residence or buy a different home, except if in divorce a property is awarded to the veteran's spouse. The entitlement can’t be restored unless the spouse refinances the property and/or pays off the VA loan in full, or the ex-spouse is a veteran who substitutes their entitlement.
I’m having financial troubles. What options does a VA loan give me?
loanDepot offers VA Interest Rate Reduction Refinance Loans. These streamline refinance loans do not require an appraisal or income verification, and only minimum documentation is needed.
Does my VA entitlement guarantee that I will get a home loan?
No. Lenders must comply with income and credit standards set by the VA. For more information on VA loan guidelines and restrictions, visit benefits.va.gov.
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