If you are preparing to buy or refinance a home, take a look at your VA Loan option, which offers lower out-of-pocket financing than traditional lending options. Here are five benefits of VA Loans.
No. 1. 100% Financing
The U.S. Department of Veteran Affairs (VA) guarantees this loan, allowing you to finance the entire purchase price of the home. Nearly all conventional and FHA loans require the loan-to-value to be below 100%.
No. 2. No Monthly Mortgage Insurance Costs
Most loans with less than a 20% down payment require you to pay for a mortgage insurance premium (for FHA loans) and private mortgage insurance, commonly referred to as PMI, for conventional loans.
While there is no monthly mortgage insurance, there is a one-time funding fee, which ranges from 1.5% – 3.3%, based on your eligibility and down payment. You may also be exempt from the funding fee if you were awarded a service-related disability.
You are also able to roll your funding fee into the loan to help keep your out-of-pocket expenses lower at closing.
No. 3. More Flexible Underwriting Standards
A VA Loan is the only loan that does not require student loans deferred over one year to be included in the debt–to-income ratio, which is used by lenders to determine how much you can afford to borrow. Also, a VA loan allows for higher debt ratios than other loans like FHA, conventional and rural development.
No. 4. You Can Have Two VA Home Loans at a Time
VA does allow you to purchase another home if you are choosing to move prior to selling your current VA-financed home. It depends on how much entitlement you have left from the previous purchase and the loan limits in the area where you are buying your new home. Your mortgage lender can help you calculate your entitlement and qualification.
No. 5. VA Jumbo Option Available
In most counties today, the maximum loan limit for conforming conventional and VA loans is $484,350. However, there are certain counties where the VA maximum loan limit exceeds $484,350; these loans are known was VA Jumbo loans. These amounts are current as of the time of writing this article. Most Jumbo loans require 20% down payment; however, VA loans do not. Depending on your eligibility, you may be able to pay a 10% or less down payment.
You can learn more about eligibility requirements at www.benefits.va.gov. Search VA home loans.
When it comes to obtaining a VA Loan, you want to work with a qualified VA mortgage lender. RCB Bank is proud to offer a VA loan benefit to our active duty service members and veterans. We can help you determine your eligibility and what you qualify for. Plus, once you start the loan process, we’re here to walk you through start to finish.
Connect with a local RCB Bank lender to get answers to your lending questions. Give us a call or visit our online Mortgage Center.
Opinions expressed above are the personal opinions of the author and meant for generic illustration purposes only. For specific questions regarding your personal lending needs, please call RCB Bank at 855-BANK-RCB. With approved credit. Some restrictions apply. Equal Housing Lender, Member FDIC. RCB Bank NMLS #798151. Kenneth Wohl NMLS #453934.