As a veteran, I feel that the VA home loan is, in most cases, the best way for a veteran or active duty military to purchase a home in today’s housing market.
Down Payment
Why? Well there are a number of reasons and at the top of the list would be down payment requirement. If the VA eligible buyer wants, they can purchase a home up to $417,000 with no down payment. In a few areas in Washington, this limit is slightly higher.
Additionally, if they want to buy at a higher purchase price, they can using a VA loan with a limited down payment. For instance, a $520,000 purchase using VA, only requires a $25,750 down payment.
Mortgage Insurance
VA Loans also do not have mortgage insurance associated with the loans. There is a “funding fee” for anyone using the program that doesn’t have a 10% or greater VA disability rating. This is a table showing that fee:
VA FUNDING FEE SCHEDULE
|
Veteran |
Reservist National Guard |
|
| First Time Use | ||
| Down Payment | ||
| Less than 5% |
2.15%* |
2.40%* |
| At least 5% but < 10% |
1.50% |
1.75% |
| 10% or more | ||
| Second and Subsequent Use | ||
| Less than 5% |
3.30%* |
3.30%* |
| At least 5% but < 10% |
1.50% |
1.75% |
| 10% or more |
1.25% |
1.50% |
| Interest Rate Reduction Refinance Loans |
0.50% |
0.50% |
*Rate for Cash-out/Regular (Non-IRRRL) Refinance, regardless of LTV
One thing that many people fail to recognize is that sometimes it makes sense to put a down payment on a VA loan. For instance, on a second usage of the program, if you put 5% down, the funding fee is only 1.5% instead of 3.3%. Compared to a conventional loan with the same down payment, VA wins handily.
Active duty, veteran and reserve/national guard
VA loans are not just limited to active duty veterans. They are also available to active duty members and members and veterans of the reserves and nation guard. There are service requirements for each category.
Streamline refinance
Another benefit of a VA loan is the ability to refinance it using a streamline process with a much lower funding fee. This is especially helpful in low interest rate times. Of course, purchasing today, it will be doubtful rates will ever be low enough to do a streamline in the future. However, if you have a current VA loan, it makes sense to see if a streamline refinance will save you money.
Like I said, I am a Vietnam era veteran and have spent many years working with VA loans. I think they are an excellent benefit for our veterans and armed forces. Give me a call today at Guild Mortgage, 360-675-6106/541-221-3455 or send me an e-mail and let’s discuss your options.
Check out these posts about FHA, Conventional Fixed, Conventional Hybrid ARMs and USDA home loans.
About the author: Fred Chamberlin is a senior loan officer with Guild Mortgage Company in Oak Harbor. He has been in the mortgage origination business for over 20 years and in the lending business for over 30 and authors a number of mortgage related blogs.
