How veterans can use VA-backed loans to buy a home

If you have served in the U.S. military, you are probably familiar with the U.S. Department of Veterans Affairs (VA) – perhaps you have worked with them. The VA is best known for helping veterans, military members and their families manage benefits, health care, pensions and insurance, but it also helps them finance homes.

Veterans have access to ample resources when they are ready to purchase a home. We’ve teamed up with Mortgage Matchup to give you an overview of some of these resources – from loan options to housing assistance to eligibility – and when you should use them. Let’s get started.

What are VA loans?

VA loans are home loans guaranteed by the VA. The VA helps veterans, active military, National Guard and Reserve service members, and eligible spouses become homeowners. In addition to home loan guarantee services, the VA assists the military community in purchasing, building, repairing and remodeling homes.

The inside scoop on VA loans

The VA itself does not issue loans. Instead, applicants work with mortgage lenders or banks to secure a loan. The VA then guarantees a portion of that loan, allowing lenders to offer veterans better terms and interest rates—and you can secure the home that’s right for you and your family.

And the benefits don’t stop there. Here are some ways the VA supports homebuyers and homeowners:

• No down payment is required as long as the sales price is at or below the appraised value of the home
• usually lower interest rates
• limited closing costs
• flexible credit requirements
• No penalty for paying off your loan early
• no need for private mortgage insurance (PMI)
• Loan amounts up to $4 million

When VA borrowers work with an independent mortgage broker, veterans can save an average of $13,432 per loan, according to new research.* In addition to all of these savings, VA home loans are a lifelong benefit for the military community: You can call on the guarantee multiple times. So if you decide to move, downsize or upgrade, the VA is here to help.

Protect your home

Life can change overnight. The real estate market could collapse and the employment situation could change suddenly. But you shouldn’t lose your home just because life takes an unexpected turn.

The VA’s work in supporting veterans on their path to homeownership doesn’t stop after you move in. In addition to home loans, the VA has several housing assistance programs designed to help the military community with all of life’s challenges. It offers:

• Help with foreclosure: If you fall behind on your mortgage payments, you will not be at risk of foreclosure. The VA loan technicians can help you avoid foreclosure so you can keep your home.
• Cash-out refinance loans: Need to replace your loan or update your terms? No problem. VA-backed cash-out refinance loans can be helpful. And if you want to withdraw cash from your home’s equity or refinance a non-VA loan into a VA mortgage, you can do that too, for up to 100% of your home’s equity.
• Rate Reduction Loans (also known as VA IRRRLs): If you already have a VA-backed loan, you can reduce your monthly mortgage payments with a reduced-interest refinance loan.
• Temporary share buybacks: With temporary interest rate reductions, veterans can make lower payments at the start of their loan. The reduced monthly payment lasts for the duration of the purchase and helps homeowners manage their finances during the first few years in a new home.

Eligibility

Now that we’ve reviewed the benefits and home assistance programs available, let’s examine what it takes to be eligible for a VA loan.

Your length of service or commitment, your service status and the type of service determine your eligibility for home loan benefits. Let’s take a look at the active duty requirements:

Current military members: If you have served at least 90 days continuously, you meet the minimum active duty requirements. For veterans, eligibility depends on when you served. National Guard members are also eligible if they have been on active duty for at least 90 days, including 30+ consecutive days.

Once you have confirmed that you meet the active duty requirements, it is time to request a Certificate of Eligibility (COE). A COE proves to lenders that you are eligible for VA benefits based on your service history and status. However, to get a VA-backed home loan, you still must meet the lender’s credit and income-specific requirements. You may also be able to obtain a COE if you are the surviving spouse of a veteran.

No matter when you served, you deserve a home that is safe and accessible. If you’re ready to buy or refinance – or just want to learn more about your options – contact your local home loan expert at Mortgage Matchup to help you find the right mortgage.