VA Home Loans | FAQs and How It Works
You did your part by keeping our country safe, and we thank you with sincerity.
Now let us help you figure out your best loan option. Listed below are some Frequently Asked Questions about the VA loan and some more information about how The VA loan Works.
How VA Loans Work
VA Loans are a combination of private funding and Government support. The Government doesn't give you the money to buy a house. Instead you borrow the money from a private lender. The Government's roll is to back the loan. Basically, they tell the lender, "hey, if any VA loan isn't paid, we will make sure you don't lose money."
What does this mean for you as a VA benefit?
Your home loan is low risk to the lender, so you get great interest rates and lots of other perks!
Below are all the great things you get when you apply for a VA Loan.
No Money Down
Because the VA loan is backed by the Government, banks and lenders don't require a down payment. No down payment makes it easier for you to qualify for a mortgage without having to save a large sum of money! You can get out of the vicious rent cycle and start building equity by simply applying for a VA loan and talking to a mortgage broker. Please note in some circumstances you may be have a down payment.
For example:
- VA loan above county limit
- Insufficient VA entitlement
- Voluntary down payment
No Premium Mortgage Insurance (PMI)
PMI is like any other insurance. You pay it once a month incase something bad happens. In this case, PMI insures the bank against you defaulting on your mortgage and short selling the house. A short sale is when you sell a home for less than the amount of the loan. In general, this is the biggest risk a lender takes when agreeing to your loan. VA loans eliminate the risk to the lender, so lenders don't have to require you to carrier PMI.
Easy Debt To Income Ratios
A debt to income ratio is a simple calculation lenders use to determine how easy it will be for you to pay your mortgage. Lenders take your monthly payment obligations like student loans, credit card minimum payments, auto loans, alimony or child support, and any other monthly debts. They divide these obligations by your pre-tax income to determine your debt to income. Again, because the VA loan is backed by the government, you can qualify for a larger loan amount with a debt to income ratio of 41%. The more favorable debt to income ratio helps you qualify for a mortgage and buy the home you want.
Lower Closing Costs
VA loans are all about making it easier for you as a service member or veteran to purchase a home. The goal is to eliminate as much of the out of pocket costs as possible. The VA loan has additional credit options at closing that allows seller and lender credits of up to 5%. These credits can be used to cover closing costs and other out of pocket expenses. Contact Treasure Coast Mortgage today to learn more about how you can buy a home with a VA Home Loan.
How To Qualify For A VA Loan
In general, service members, veterans, and spouses qualify for VA loans. Because the loan is guaranteed by the government you must meet one of the loan requirements:
- 90 consecutive days of active service during wartime
- 181 days of active service during peacetime
- 6 years of service in the National Guard or Reserves
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
It is also important to note that you can still qualify for a VA loan if you have previously purchased a home using another loan type or if you previously used the VA loan benefits.
Text or call us at 772-444-6362 to see if you qualify for a VA loan. Or start your application with Treasure Coast Home Loans. We will help you complete the application, find a lender, and qualify for a mortgage!