Owning a home is a dream for many people. Property owners will enjoy long-term benefits, including value increases while having a consistent and stable place to call home. One of the challenges that can come with owning a home is getting the mortgage and financing needed to purchase the property.
For veterans, the VA offers a great home loan program that is an undeniable benefit. There are several reasons why the VA home loan program is such a great option for veterans.
Reduced Down Payment Program
One of the main benefits of a VA mortgage program is that you will not need a significant down payment. When you get a VA home loan, it will be administered by a bank but guaranteed by the VA. Due to this, it does not require a significant amount of risk for the banks.
At the same time, the VA does not require banks to need a down payment as part of the VA mortgage standards. Ultimately, this makes it possible for you to purchase a home with very little cash in hand. It opens up the opportunity to become a property owner faster for more veterans across the country.
Higher DTI Requirements
When you’re wondering how much house can I afford with a VA loan, one of the most important factors to consider is what your home payment will be compared to your income. All mortgage lenders today will use a debt-to-income ratio when evaluating the presented by the buyer. In most cases, they would prefer that your total housing payment is not more than a third of your gross monthly income.
For those that are looking for a VA loan, this standard can be increased. This can help you afford a larger mortgage and ultimately a more valuable home. It is important to ensure that you can afford your new housing payment, no matter what type of mortgage you take out.
No PMI Requirement
Along with not requiring you to have a down payment, people who get a VA loan will not need to pay PMI monthly. PMI, which stands for private mortgage insurance, is a type of insurance that is designed to protect you in the event you go into foreclosure. It is typically charged to buyers that do not have at least a 20% down payment as this comes with the additional risk for the bank. Today, many mortgage lenders are willing to forego this requirement for VA loans as they will rely on the veterans association’s guarantee.
Reduced Closing Costs
When you are going to purchase a home and take out a mortgage, there are always going to be costs that go along with it. While you may be prepared for having a down payment, moving costs, and furniture purchases, a lot of people are caught off-guard at closing when they have to pay various closing costs. With traditional mortgages, these closing costs can grow quickly and could end up being thousands of dollars. Those that choose to get a VA loan will be able to avoid many of these costs. A VA mortgage typically has next to no closing costs for its borrowers.
As you are looking for a traditional mortgage, you will find that the mortgage lender will require you to have a certain credit score. Those that do not have a top score are often denied a loan or charged a much higher interest rate. While your mortgage lender will check your credit for a VA loan, it is not a significant part of the total underwriting package. Those with less than ideal credit scores can often qualify for a loan and still obtain a reasonable and competitive interest rate, which can save a lot of money over time.
Veterans looking to purchase a home will always enjoy the great benefits of the VA home loan program. This is a unique mortgage program that is only available to veterans and their direct families. When you are looking for a new mortgage program to buy your dream home, the VA home loans offer many benefits that can make them such a great mortgage option.
Julian Carter is a farmer of words in the field of creativity. She is an experienced independent content writer with a demonstrated history of working in the writing and editing industry. She is a multi-niche content chef who loves cooking new things.