VA Home Loans : Fact or Fiction



I was chatting with a friend the other day, when she mentioned that her Marine son is anxious to buy a home, but he’s “saving his VA loan.”


“What is he saving it from?!” I asked in confusion.


“Well, you can only use it once, so he’s saving it for a better housing market,” she explained to me.


Oh no!


That’s simply not true at all! I provided her with all the correct information, but it inspired me to correct some of the misnomers about using a VA Home Loan.


Share this with your friends! Those who serve in our armed forces deserve to own a home and simply supplying them with the correct information can be life changing!




 




VA loan eligibility can be reused. It does not expire.


I have one client who has used his VA loan 3 times so far: He purchased one home in California while in the Infantry, then rented out that home to move here for MARSOC. Here in NC, he bought a second home, while continuing to rent out his California house (both homes purchased and still under a VA Home Loan). He then sold both his primary residence and the rental in Cali. He retired from the Marine Corps, and used the VA loan to purchase another new home, with plans to use the VA Home Loan again as his family grows.



 



It doesn’t have to be just a resale or a new home. However, condos are different and have to be approved by the VA.



 


Actually you can refinance a home as well, whether your current home loan is VA or not.


 



No down payment is required for a VA loan! There are some out of pocket expenses associated with buying a home, even without a down payment though. You will likely pay for an inspector and put down earnest money. Closing costs can often be worked out so that you don’t have to pay anything at closing. This varies, case by case and having an excellent real estate agent can help you with this.


 



Loan limits get tricky and it’s definitely best to speak with a lender who specializes in VA loans so they have complete familiarity with the complexities of a VA Loan. But basically, the VA-backed home loan limit is the amount the VA will guarantee to pay the lender if you default on your loan. That’s the backbone of the VA Home Loan.


The VA isn’t the one actually lending you the money to purchase your home. They just eliminate most the risk for the lender, along with several other perks like no down payment. The VA doesn’t limit how much you can borrow to finance a home. They do however, limit their guarantee to the lender. These limits vary by state, county, and eligibility.


 



The name might confuse you, but VA loans work for active duty, retired military, prior military, reservists, and more.


 



Your credit score doesn’t hold the same weight when you use a VA loan, which can be so helpful for a first time buyer especially. Unlike many loan programs, a lower credit score, bankruptcy or foreclosure does not disqualify you from a VA home loan. Shop around for a lender because they each have their own standards for past credit issues. However, the VA guidelines don’t state a minimum credit score to qualify. The VA also considers your credit to be re-established when you have established 2 years of clean credit, following a foreclosure or bankruptcy.


The exception, though, is a foreclosure involving a VA home loan. In this case, you may need to pay back the amount owed on the foreclosed VA loan to regain eligibility. But for most home buyers with past credit issues, a VA home loan could be their ticket to homeownership.


 




This is super complex but potentially VERY helpful. It’s too complex for me to write up a short summary, so it’s best to just go to this website to gain a better

 



As the anecdote about my client above demonstrates, you can use the VA loan several times! The VA loan cap is set by the lender themselves, though your interest rate is usually lower if you stay within the VA limits. That means if you used the VA loan for your starter home as a boot, you can use it again to purchase your dream home as a salty old vet over a decade later.


 



It’s called the VA Funding Fee. VA typically charges a funding fee to help fund the cost of the program and make home buying sustainable for future Veterans. The fee is between 0.50 percent and 3.3 percent of the loan amount, depending on service history and the loan type.


However, not everyone pays the VA funding fee. Disabled Veterans who are receiving compensation for a service-connected disability are exempt. Likewise, Veterans who are eligible for disability compensation, but are receiving retirement or active duty pay instead, are also exempt from the fee.



 


REMEMBER:

So much is situational and dependent on eligibility. The best thing to do is speak with a lender who specializes in VA home loans.

I’ve been working with members of the military since I began my career in real estate, as I’m particularly passionate about helping those who do so much for us. My real estate team (realtors, brokers, marketers, etc) includes a retired veteran and MARSCO spouse, and the rest of us are simply thankful, and proud to be American.

More questions? Give me a call.

(910) 619-9143