1. No down payment—One of the most valuable and touted benefits, and for good reason. Saving enough for a down payment can be the biggest obstacle to buying a home. But a VA loan eliminates that roadblock. In most cases, qualified VA buyers don’t have a down payment requirement. A VA purchase transaction still requires closing costs and often includes an earnest money deposit.
2. More lenient loan requirements—The required credit score for a VA loan can be lower than for a conventional loan—around 620 for a VA loan compared with a range of 650 to 700 for most conventional loans. In addition, the required debt-to-income ratio for VA loans is often more flexible than for conventional mortgages.
3. No mortgage insurance—Most conventional buyers have to pay private mortgage insurance if they put less than 20% down. Federal Housing Administration loans come with their own forms of mortgage insurance. But a VA loan waives that insurance requirement, which can be a big savings in monthly payments.
4. Limited closing costs—Legally, veterans might have to pay for certain closing costs, which include the following: credit report, origination fee, recording fee, and title insurance. However, there are some fees that veterans don't have to pay. And the VA allows lenders to charge no more than 1% to cover the costs of originating and underwriting the loan.
5. Extra assistance with appraisals—When a home is having trouble reaching the purchase price during the appraisal process, buyers and lenders can ask the VA appraiser to consider adjusting the valuation before making a final determination. Appraisers notify lenders in the event the appraised value is likely to come in low, giving buyers and real estate agents 48 hours to supply additional information that the appraiser might not be aware of to help justify the home’s value.
For veterans interested in purchasing a home utilizing a VA home loan, these local lenders can help:
North Country Federal Credit Union
