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Title:VA Home Loans: Big Savings for Veterans

Author:VA Careers

Date:June 2023

Source:U.S. Department of Veterans Affairs © 2023, Reprinted with permission

Volume:Volume 3 Issue 200

Are you thinking about buying a home but are worried about money for a down payment, a low credit score or even a previous bankruptcy or foreclosure? You may want to check out your heard — earned VA home loan benefit.

There are several benefits to using a VA home loan. When using a VA — backed loan guaranty, if the sale price of the home is at or below its appraised value and you have enough entitlement to cover the value of the home, then a down payment is not required. There may be some fees and closing costs to cover, but you don't have to worry about private mortgage insurance. Additionally, disabled Veterans may have some fees waived, which makes a VA home loan an even more affordable and attractive option.

If you have experienced a bankruptcy or foreclosure, VA home loans are designed to get you back on your feet, as quickly as possible. With conventional loans, you could wait years to qualify for a home loan, but with VA — backed home loans the typical waiting period is two years for chapter 7 bankruptcy, one year for chapter 13 bankruptcy, and two years following a foreclosure.

If having a low credit score is a concern, a VA home loan could still make home ownership possible. VA does not have a minimum credit score; if one is imposed, it is by the private lender and you can always shop a different lender. But, given that VA is guaranteeing a portion of the loan—essentially telling lenders that VA will cover 25% of the risk—many banks and mortgage companies will accept FICO scores that are lower than what they accept for conventional loans.

Here's the breakdown of your earned VA Home Loan entitlement:

  • Veterans using the VA home loan are generally not required to have a down payment.
  • Veterans using the VA home loan also aren't required to carry any mortgage insurance, which saves borrowers hundreds of dollars on their monthly mortgage payments.
  • Veterans using the VA home loan benefit enjoy limited closing costs.
  • VA home loans have very competitive interest rates.
  • Veterans aren't charged any prepayment penalty if they are able to pay off their mortgage earlier than required while using the VA loan guaranty.
  • VA provides assistance to help Veterans retain their homes during periods of temporary financial difficulty.
  • The VA home loan benefit can be used multiple times throughout the Veteran's life.

For more on the top five benefits to using the VA home loan guaranty, check out this video.

To learn more about any of these topics or your VA home loan benefit in general, be sure to also check out the latest episode of the SITREP.

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