When they get back from military service, many veterans have trouble finding their place in civilian society. Due to issues like combat-related disabilities or post-traumatic stress disorder (PTSD), some servicemembers have trouble finding gainful employment and getting approved for traditional mortgage loans. Fortunately, the U.S. Department of Veterans Affairs offers loan insurance that is similar to the insurance homebuyers get with an FHA loan.
Just as with an FHA loan, a VA loan is actually just a regular mortgage that is insured by the VA. This means that the VA agrees to pay your lender back if you default on your loan. This makes lending less risky for banks, which means that you are more likely to be approved for better terms than you would be with a traditional loan.
The biggest difference between an FHA loan and a VA loan has to do with the down payment.
To help you become a homeowner without a high down payment, VA loans offer you the advantage of purchasing a house with zero money down. If you’re a first-time buyer and an active military service member, veteran or military spouse, you can apply for a VA loan with NO down payment required.
This is a huge deal for couples and individuals who are interested in purchasing a home but don’t want to empty their savings to do it.
You will receive a certificate of Eligibility (CoE) if you apply and qualify for a VA loan. You can bring this certificate to private lenders, such as banks, to let them know you qualify for a VA loan. Then, your loan amount will depend on:
- Your credit
- Your income
- Your assets (such as investments, retirement, savings, etc.)
Another huge benefit of a VA home loan is that you don’t need a minimum credit score. Lenders may just look at your credit history to determine the loan amount you may be offered.
Plus, the only cost you’ll have to pay is a VA fee of 1.5% to 3.5 % of the value of the property. But in return, the VA will guarantee your loan (meaning it will pay the lender 25 percent) if you are unable to pay the loan.
Start saving and invest in your own home today!