Questions about VA mortgages? We have answers!
The VA home loan program is an incredible opportunity for our nation’s veterans and active-duty military personnel to buy a home with no downpayment. Here are some common questions and answers about this financing option that offers a number of important benefits to those who qualify:
Who qualifies for VA mortgages?
The program is designed for veterans, active duty service members, reservists and members of the National Guard. Visit the Veterans Affairs website to review the qualifying criteria, including length of service, for each group. Surviving spouses may also qualify. What can I use my VA benefit for?
VA home loan programs can help you buy, build, repair/renovate or refinance a home.
How much of a down payment will I need?
There is no set down payment requirement with the VA home loan program. In fact, nearly 90% of all VA home loans are granted without a down payment. The VA home loan program also has lenient eligibility requirements and competitive interest rates.
Will I have to pay PMI?
Not if you qualify for the VA home loan program. PMI —private mortgage insurance — is provided by a private mortgage insurance company to protect lenders against loss if a borrower defaults. (Studies show that generally, the lower the down payment a homebuyer makes, the greater the risk of default, with the highest risk being no-downpayment mortgages.) That’s why typically, PMI is required with many loan programs if your down payment is less than 20 percent of the value of the home you are purchasing or refinancing.
The cost of PMI is customarily added to your monthly mortgage payment.
VA mortgages do not have PMI. Without this expense, you may enjoy lower monthly mortgage payments. Combined with affordable interest rates, VA Loans can help save you thousands of dollars over the term of your loan.
What about closing costs?
Closing costs include costs related to providing and finalizing your mortgage and home purchase. Even if you don’t have a down payment, you’ll have to pay at least some of the closing costs associated with your VA home loan. If you’re using a VA home loan to buy, build, improve, or repair a home or refinance, you’ll need to pay at closing a VA funding fee unless you meet certain requirements. The funding fee is a one-time payment that must be paid on any VA home loan, with some exceptions. You will receive an estimate of your closing costs in advance of your closing date for your review.
At 1st Rate Mortgage, we work with the VA home loan program and many others that can help individuals and families purchase their first home, including FHA, Homepath and more. Have additional questions about the VA mortgage program? Just give us a call:
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.