The Nuts and Bolts of a VA Mortgage Program




"More than 21 million Veterans live in the U.S. today, but only about 6% bought a home using a VA loan in the past 5 years."


That percentage could be much higher if more veterans knew more about this program, here are some basic guide lines gleamed by a posting of a lender, Mr. Daniel Dobbs .


1. Buy Now No Down Payment, No Mortgage Insurance


The big advantage to a VA loan is no down payment.


AND there is No Mortgage Insurance.  With a VA loan, buyers avoid steep mortgage insurance fees.


For Example:  A standard loan/FHA at 5% down, the required Mortgage Insurance costs $150 per month on a $250,000 home.


With a VA loan, this buyer could afford a home worth $30,000 more with the same monthly payment, simply be eliminating the Mortgage Insurance.


A VA loan saves you money upfront and increases buying power.



2. Multiple Benefit Use


A VA loan can be used many times if paid off.


3. VA Benefit Never Expires


Once earned, eligibility never goes away. Eligibility is based on the length of time served, and the period in which you served.


To check eligibility, first obtain a DD Form 214; which can be requested directly from VA’s eBenefits website


4. Surviving Spouses May Be Eligible


More than 3,000 surviving spouses purchased a home with their fallen partner’s VA benefit in 2018 alone.


Un-remarried spouses can buy zero & the funding fee is waived.


5. VA Loan Rates Are Lower


VA loan rates are typically about 0.25% lower than conventional loans.


The VA backs the mortgages, which have the lowest foreclosure rates of any loan type, making them a lower risk for lenders. Those savings are passed on to Veterans.


6. VA Loans Are Available from Local Lenders


The VA loans available from private companies, not the government itself.


7. Buy, refinance or tap into home equity


A VA loan can be used to refinance an existing loan, whether or not it’s a VA loan.


Homeowners with a current VA loan, can use the Interest Rate Reduction Refinancing Loan, or IRRRL, to easily drop their rate and payment without an appraisal, or even submitting pay stubs, W2s or bank statements.


The VA streamline refinance, gives vets, a faster, cheaper way to access lower refinance rates when rates fall.  See Mr. Dobbs web site at Streamline Mortgage for more information.


A VA “cash-out refinance” can be used to turn a home’s equity into cash to pay off consumer debt, make home improvement etc.


Many vets drop their rate & get cash out accomplishing two goals at once.


8. Lenient guidelines for lower credit scores, bankruptcy, foreclosure


Unlike many loan programs, a lower credit score, bankruptcy or foreclosure does not disqualify you from a VA home loan.


Unfortunately, many homeowners across the country, including military and civilians alike experience bankruptcies and foreclosures in their life-times due to financial hardships.


Fortunately, these financial setbacks don’t permanently bar VA-eligible home buyers from ever owning again.


The exception is a foreclosure involving a VA loan. A vet will need to pay back the amount owed on the foreclosed VA loan to regain eligibility.


9. Funding fee waivers


VA loans typically charges a funding fee to defray the cost of the program.


These fees run between 0.50% and 3.3% of the loan amount, depending on service history and the loan type.


However, not everyone pays the VA funding fee.


Disabled Veterans who are receiving compensation for a service-connected disability are exempt.


Veterans who are eligible for disability compensation, but are receiving retirement or active duty pay instead, are also exempt from the fee.


10. Buy a condo with a VA loan


VA loans are eligible for many types of properties including a single-family (free-standing) homes, a home of up to 4 units, and manufactured homes.


But condominiums are commonly overlooked by VA home buyers.


The VA maintains a list of approved condominium communities; and their association requirements that are much easier than Fannie or FHA guidelines.


It’s not a short list; there are more than 9,000 communities in California.


Searches are by city, state, or condo name on VA’s condo search tool.



Daniel Dobbs (.org)