Maximize Your Veteran Benefits by Exploring VA Loans

January 30, 2019

If you're eligible for veteran's benefits, you have access to a specialized class of home loan that may help your dreams of homeownership come true. The Department of Veterans Affairs backs loans offered by commercial lenders, with features that can get you more house for your money. Even if you already have a home, VA-backed loan products are also available for refinancing. 

Once you work with a lender or the VA to receive your Certificate of Eligibility, you can pursue one of these loans, taking advantage of helpful features such as no mortgage insurance requirements and reduced or completely compensated down payments. These empowering traits can help you make the most of your VA benefits and move into an ideal home for your family. 

A Specialized Loan Type

When seeking a mortgage for your home purchase, you may wonder what kinds of rates and features you are eligible for, based on personal financial measures such as your FICO credit score or debt-to-income ratio. VA loans maximize your effective purchasing power, with VA backing leading to favorable terms. 

For instance, our VA loan products are available with no down payment for veterans with FICO credit scores of 600 or greater. A score of 560-599 means there is a 5% down payment required on the home. There is no mortgage insurance needed for VA loans, taking away a recurring expense typically associated with low down payments. Debt-to-income ratio is also no impediment to receiving a VA loan: Veterans with DTI ratios of up to 60% are eligible for these loans. 

Cash-out refinancing is available with VA backing. If you already have a partially paid-off home loan, but need cash to pay off a high-income debt, perform repairs or otherwise make a major investment, a cash-out refinancing is one way to get the required equity. This process involves taking out a higher-value loan on your home and receiving the difference as usable equity. Veterans with FICO credit scores of 620 and up may refinance up to 90% of home value, with over 640 making applicants eligible for 100% financing. 

How Much Liability Will the VA Assume? 

The VA typically allows veterans to borrow an amount of money equal to four times available entitlement for loans with no down payment. Basic entitlement from the VA is $36,000 at present. The exact amount of money the VA will assume liability for depends on the region of the house in question, due to the differing prices of homes in different parts of the country. 

The VA also offers a few helpful hints illuminating the extra advantages of its services. For instance, there is no penalty for paying off a VA-backed loan early. Furthermore, purchase mortgages backed by the VA aren't just for first-time homebuyers. If you're a veteran considering diving into the housing market, it can pay to determine your eligibility status. Once you have your Certificate of Eligibility, you can explore the options available and determine the most effective path to your new home. Your state may even offer extra veteran benefits on top of the VA's national programs. 

 

Source: Department of Veterans Affairs