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What is a VA Loan?
The VA loan is a mortgage loan offered by the U.S. Department of Veteran Affairs (VA). A VA home loan is a powerful tool for Veterans to purchase or refinance their home mortgages. These loans generally offer low interest rates, easier qualification standards than conventional home loans, less strict credit and income standards, and no prepayment penalties.
History of VA Loans
A VA loan is a mortgage loan funded by the U.S. Department of Veteran Affairs (VA). The VA home loan program was created in 1944 as part of the GI Bill of Rights signed by President Franklin D. Roosevelt. The program was built to help those who served in the military during World War 2 achieve their dreams of home ownership. The VA home loan program has serviced over 24 million home loans for Veterans and active service members since its creation. VA loans are great for those men and women and their families because of their accommodating loan requirements.
- 0% down payment
- FICO scores as low as 580
- Lower interest rates
- No monthly mortgage insurance
- And much more!
What are the requirements for a VA loan?
The only people who may be eligible for a VA loan are Veterans, current active-duty military, National Guard, or Reservists and in some cases surviving spouses of a deceased Veteran. A Veteran’s eligibility for home loan benefits may only be determined by the VA. If you fall into any of the below categories and you think a VA loan is right for you, contact a local On Q Mortgage Consultant to get started.
General Rules for VA Loan Eligibility
A Veteran is eligible for VA home loan benefits if they have served on active duty in the Army, Navy, Air Force, Marine Corps, or Coast Guard after September 15, 1940, and was discharged under conditions other than dishonorable after either:
- Served 90 consecutive days of active service during wartime
- Served 181 days of active service during peacetime
A greater length of service is required for Veterans who:
- Enlisted (and service began) after September 7, 1980
- Entered service as an officer after October 16, 1981
These Veterans must have completed either:
- 24-continuous months of active duty, or the full period for which called or ordered to active duty, but not less than 90 days (any part during wartime) or 181 continuous days (peacetime)
- Have been an active member of the National Guard or Reserves
- Are married to a service member
How does a VA Loan compare to other loan types?
There are plenty of differences between VA loans and other loan types beginning with the down payment amount. VA loans usually require little to no down payment where conventional and other loan types may require anywhere from 3% to 20% down. VA loans are only available to Veterans, active service men and women, and their families. Take a look at the chart below for more common differences in various loan types.
How much do I have to put down for a VA Home Loan?
A VA loan, in most cases, does not require a down payment. These mortgages are insured by the VA. This is a great option for first time home buyers or families that have or are currently serving in the military who don’t have a lot to put down for their home.
Do VA loans require Private Mortgage Insurance (PMI)?
VA loans do not require qualified home buyers to pay for Private Mortgage Insurance (PMI) or any monthly mortgage insurance premiums. This is another great benefit to a VA mortgage loan. Contact an On Q Mortgage Consultant to get started on your journey to home ownership.
Who can apply for a VA Home Loan?
The only people eligible for a VA loan are Veterans, current active duty military, National Guard, or Reservists and in some cases surviving spouses of a deceased veteran. If you’re a potential home buyer and you fall into any of these categories, contact a local On Q Mortgage Consultant to find out if a VA loan is right for you.
VA Loans for First Time Home Buyers
VA loans can be a great solution for qualified First Time Home Buyers with little to no down payment options. On Q Financial offers our On Time Closing Guarantee, Simplicity mobile app with our technology, Multicultural Advantage, and more to help qualifying home buyers achieve their dreams of home ownership. Talk to your local On Q Mortgage Consultant to get started.
VA Loans for Realtor Clients
On Q Financial works with realtors and their clients to find the best loan programs to match their needs and ensure that we’ll close on time.
We offer products and services to make sure your clients have the simplest mortgage experience with our Simplicity mobile app, On Time Closing Guarantee, Multicultural Advantage, and more.
VA Loan Scenario
The following loan scenario is only an example.
Actual amounts, fees, and rates vary depending on each individual borrower’s situation and additional factors. Loan scenario is based on a 30-year fixed VA loan and amounts are estimates. An example loan scenario based on a $200,000 purchase price, 30 year fixed VA mortgage loan, interest rate of 4.5% and APR of 4.688% the monthly payment would be approximately $1,143. Estimated closing costs would be $4,086. Although down payment is 0%, additional funds may be due at closing. Amounts used to calculate monthly payment and closing costs will vary. A VA funding fee will be charged and can be financed into the loan. VA funding fee is 2.3% of the loan amount for first time use of entitlement depending on the branch of the service the veteran was in. All amounts and figures are estimates used for comparison purposes only and may not apply to every loan. Borrower must meet all loan program and eligibility requirements. This is not an offer for extension of credit or a commitment to lend nor is it a promise to provide a loan with terms shown above.
Restrictions may apply. Members of the Reserves and National Guard who are not otherwise eligible for loan guaranty benefits are eligible upon completion of 6 years of service in an active or drilling status in the Reserves or Guard (unless released earlier specifically for a service-connected disability). The applicant must have received an honorable character of discharge. A general or under honorable conditions discharge is not a qualifying or acceptable character of discharge. Service in the Individual Ready Reserve or Control Group (inactive status) is not qualifying length of service for the home loan program. Cases involving other than honorable discharges will usually require further development by the VA Compensation Department. This is necessary to determine if the service was under other than dishonorable conditions.
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