VA Home Loans A VA loan is a great option for Veterans buying their first home.

VA Home Loans
If your are a U.S. Veteran, first of all thank you for serving our country! As a benefit of your service, you should definitely ask your lender about your VA Loan options. The federal VA Loan is a great loan product because it is one of the rare 100% financing loan (no down payment) options available to eligible vets.

Benefits of a VA Loan
A VA loan is a great program for veterans for the following reasons:

  • No down payment (100% financing)
  • No income limits
  • Don't need to be a first-time homebuyer
  • Seller can pay your closing costs
  • Lower minimum credit scores
  • Low monthly mortgage insurance premiums
  • Available in all 50 states

Eligibility for a VA Loan
Qualifying for an VA Loan is often easier than qualifying for other types of loans. You may still qualify for a VA Loan with a credit score that is in the mid to low 600's.

It is even possible to get a VA loan even if you have not yet developed a credit history.  With a VA loan, lenders are also allowed to build an alternate credit history. An alternate credit history is made by proving that you have paid other bills such as rent, utilities, and insurance on time over the past 12 months. Lenders will need to make sure that your monthly payments are affordable. They will want to see that your housing and other debt payments are not more than 42% of your gross monthly income (before taxes).

VA and State Bond
In many states, it is possible to get a VA-insured loan that is combined with your local Housing Finance Agency's lower rate. Depending on the current interest rate of your state's homebuying program, this could be a very good option to explore. Of course you can also get a market rate VA loan from pracitically any lender. Do shop around though as VA Loan rates differ and the fees lenders charge does too.  By working with a lender who specializes in offering your local state bond program, you are more likely to get a great rate if you qualify.

VA Fees
In general, the fees on an VA-insured loan will be about the same as other loan options, but shop around to make sure. A VA loan does have an up-front mortgage insurance premium that you finance as a part of your loan plus a monthly mortgage insurance premium as well. Of course, if you have enough savings to make a 20% down payment then a VA loan is probably not your best option.  If you can avoid the cost of mortgage insurance you should. Ask your lender to tell you more about the VA loan and if it is a good option for you.

State VA Loan Programs
A few states such as AlaskaCaliforniaOregonTexas and Wisconsin also have State VA programs. These program are similar to the State Bond Loan programs because they offer eligible vets a below-market rate. If you are lucky enough to be in one of these states contact your state VA program or ask your local lender to see if you qualify and if it is a good deal for you.