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VA Home Loans

A VA home loan is a loan guaranteed by the Veterans Administration. This type of loan is only available to certain borrowers through VA-approved lenders. The guarantee means that the lender is protected against loss if the borrower fails to repay the loan. As a result of this guarantee, a VA home loan helps you get a better rate and a lower payment each month.

To get a VA home loan, you must be:

  • A current member of the U.S. armed forces
  • A veteran
  • A reservist/national guard member, or

VA mortgage loans can be guaranteed with no money down and there is no private mortgage insurance requirement.

Best Fit For A VA Home Loan:

Most active-duty military and veterans qualify for Veterans Affairs mortgages. Many reservists and National Guard members are eligible as well. Spouses of military members who died while on active duty or because of a service-connected disability may also apply.

How A VA Home Loan works:

No down payment is required from qualified borrowers buying primary residences. The VA does not lend money, but guarantees loans made by private lenders.

Cost:

The VA charges an upfront VA funding fee, which can be rolled into the loan or paid by the seller. The funding fee varies from 1.4 percent to 3.6 percent of the loan amount. However, those who receive VA Disability are exempt from the funding fee.

The VA allows sellers to pay closing costs but doesn’t require them to. This means borrowers might need money for closing costs. Borrowers may also need money for an earnest-money deposit.

Pros:

VA borrowers can qualify for 100 percent financing. Veterans do not have to be first-time buyers and may reuse their benefit.

Cons:

According to the VA, there isn’t a cap on the amount you can borrow. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified veteran with full entitlement may be able to borrow without making a down payment. These loan limits vary by county, since the value of a house depends in part on its location. There was a recent change for 2020 that eliminates the need for loan limits which will help those bigger loan amounts.

Have questions?  Give us a call! One of our mortgage specialists would be happy to answer all of your questions.

**Intercap Lending is not affiliated with or acting on behalf of or at the direction of FHA, VA, USDA or the Federal Government.

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