Veterans Affairs Home Loans

The Department of Veterans Affairs offer home loans to veterans that have become extremely popular with qualified home buyers. In the past year, the government has guaranteed 489,418 VA loans which totaled over $63 billion. Unlike most mortgages, there is no down payment require for VA home loans and they are available from most lenders. The government also puts a cap on the amount of closing costs, origination fees and appraisal fees that lenders can charge.

There are over 29 million veterans and regular active-duty personnel that are eligible for Veterans Administration (VA) guaranteed mortgages loans.  These loans are made by private lenders, mortgage companies, banks or savings and loans to buy homes for personal occupancy. The Veterans’s Administration guarantees a percentage of the loan, protecting the lender from loss up to that amount and offers qualified borrowers the opportunity to obtain a home loan with excellent terms. 

Benefits of a VA Loan To Purchase a New Home

There are many benefits to qualifying for a such as:

• No Down payment required (unless purchase price is more than property’s value or required by the lender)
• Equal opportunity for all qualified veterans.
• Veteran Buyer is informed of reasonable value
• Interest rate is negotiable
• Veteran borrower can finance the VA funding fee
• Comparable closing costs to other financial programs (sometimes less)
• Mortgage Insurance is not required
• Veteran borrower has the right to prepay without penalty
• VA will assist veterans in default due to temporary financial hardship

The Veterans Benefits Act of 2004

The Veterans Benefits Act of 2004 made many changes to the mortgage process since the act passed. One of the major differences is the modification of the maximum guaranty amount of $60,000. Now, for qualifying loans in excess of $144,000, the maximum is equal to 25%  of the Freddie Mac conforming loan limit, which is determined under the Federal Home Loan Mortgage Corporation Act. Another change that has made VA Loans more attractive is by raising it’s loan limit to $417,000 and making improvements to it’s adjustable rate mortgage program (ARM). Veterans are now able to purchase new homes within the national average home price.

By the VA reinstating the ARM Program, it allows interest rates to fluctuate with a specified index over the life of a loan. Within the program, rate adjustments are limited to a maximum increase or decrease of 1% point. And over the course of the mortgage loan, the rate adjustments will be limited to a maximum increase or decrease of 5%.

Qualifying For A VA Loan

Here are the guidelines in order to qualify for a VA mortgage loan:

• Steady employment history for two years (preferably with same employer)
• Two years of steady income either the same or increased
• Bankruptcy’s must be discharged for at least two years and followed by two years of good credit history
• Credit report should reflect less than two over 30 day late payments in the last 12 months
• Foreclosures must be two years old and followed by two years of good credit history

If you’re considering buying a new home and need more information on VA financing and benefits, visit the U.S. Department of Veterans Affairs. For more information on mortgages, visit the experts at New Homes Central Lending.

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