Receiving a VA-backed home loan provides you with several different benefits that can help you on your journey to homeownership.
VA Home Loans
Securing a mortgage for your prospective home can feel like an intimidating process. Fortunately, for current service members, veterans and spouses not remarried, the U.S. Department of Veterans Affairs sponsors home loans through approved lenders. These loans take a significant part of the financial burden off the borrower through different benefits. Here, we provide information on these loans’ advantages, eligibility requirements and how you can apply for them.
What Is a VA Home Loan?
When the VA agrees to offer you a home loan, it means they guarantee a portion of your mortgage secured through a private lender. Current service members, veterans and eligible surviving spouses who have not remarried all have the potential to secure a VA-backed home loan. As a government backed loan there are different requirements designed to reduce the financial burden to the borrower through various benefits
VA Loan Benefits
Unlike conventional mortgages, buyers who qualify for a VA home loan do not need to make a down payment on their prospective property. Instead, veterans and service members have the opportunity to put that money into their savings, projects or other necessary costs.
What Kind of Loans Does the VA Offer?
The VA offers a few types of loans depending on the needs of the person seeking one. The department’s official website lists these different available loans for eligible people.
Veterans, service members or spouses looking to buy a home will most likely want to obtain a purchase loan. A VA purchase loan allows you to:
- Buy a single-family home, up to 4 units
- Buy a condo in a VA-approved project
- Buy a home with the aim of improving it
- Buy a manufactured home or lot
- Build a new home
- Make changes or add new features to make your current home more energy efficient
Native American Direct Loan Program
The Native American Direct Loan program (NADL) applies to Native American veterans or veterans who are married to a Native American. The program allows qualified people to buy, build or improve a home on federal trust land. The loan comes with no down payment required, no private mortgage insurance (PMI), limited closing costs and a low-interest, 30-year fixed mortgage, and, like other VA loans, people can reuse the benefit.
Interest Rate Reduction Refinance Loan (IRRRL)
Sometimes referred to as a “streamline” refinance, an Interest Rate Reduction Refinance Loan (IRRRL) may help those who:
- Already have a VA-backed home loan
- Use the IRRRL to refinance your existing VA-backed home loan
- Prove that you currently live in or used to live in the home covered by the loan
An IRRRL can help you lower your monthly mortgage payment or stabilize your payments by moving from an adjustable interest rate to a fixed one.
Cast-Out Refinance Loan
A cash-out refinance loan will benefit those who want or need to take cash out of their home equity to pay for other expenses. This kind of loan allows you to replace your current loan with a new one under different terms or refinance a non-VA loan into a VA-backed one. To be eligible, you have to:
- Qualify for a VA-backed home loan Certificate of Eligibility
- Meet VA and lender standards for credit, income and other requirements
- Live in the home you’re refinancing
If you find yourself in need of money to pay for expenses, this particular loan will help.
Step-by-Step Guide to Apply for a VA Home Loan
Obtain your Certificate of Eligibility. You will need to show this to lenders to prove that you qualify for a VA-backed loan.
Find a lender that participates in the VA home loan program. Having a lender who understands the details of VA loans will make the borrowing and purchasing process infinitely easier.
The lender will request the VA appraisal and review your financial history and information. If you and your prospective home meet the requirements, you can apply for your VA loan with the help of your lender.
VA Home Loan Eligibility
People considering applying for a VA home loan need to consider the particular eligibility requirements laid out by the Office of Veterans Affairs. In order to qualify, applicants need to meet at least one of the following criteria:
- Served 90 consecutive days of active service during wartime
- Served 181 days of active service during peacetime
- Served at least six years of service with the National Guard or Reserves
- Are the spouse of a service member who lost their life in the line of duty or as a result of a service-connected disability
As long as you fall under one of these categories, you can apply for a Certificate of Eligibility.
A Lender You Can Trust
If you feel prepared to start your home loan journey, Capital Bank Home Loans has all the resources you need. Capital Bank proudly guides veterans, service members and spouses who have not remarried through the VA home loan process, helping them to become homeowners, or helping them to save through a VA refinance.