Using Your VA Benefits To Purchase A Home
If you’re in the military, an eligible veteran or a qualifying spouse of a service member, you may have questions about using your VA benefits when you buy a home. The #1 reason many vets opt to use their VA benefits to buy a home with a VA loan is that there is NO DOWN PAYMENT required. The interest rates can be lower, as well. Join us, as we look at using your VA benefits and the VA loan and whether it may be right for you.
Eligibility For Your VA Entitlement
When using their VA benefits, service members may be eligible for a VA loan if they have served:
- 90 consecutive days of active service during wartime
- 181 consecutive days of active service during peacetime
- More than 6 years of service in the National Guard
- More than 6 years of service in the Reserves
Of course, service members that would like to use their VA benefits in this manner should always speak with a loan officer about their options and other qualifications to verify that they are indeed eligible for a VA loan.
Do All Homes Qualify For A VA Loan?
The VA requires that the homes their veterans buy with their VA benefits be safe, clean, and secure. Fixer Uppers can be a tough one to pass inspections. The VA also requires the house be free of termites.
Also, the VA only loans money to buyers who plan to live in the house, not to those planning to purchase investment properties with VA benefits.
VA Loan Benefits That Make It A Better Choice?
When using your VA benefits, there is no down payment required, that means less money due at the time of purchase. Although there is a funding fee, there is no mortgage insurance required.
Which can mean the monthly payments may be lower since there is no mortgage insurance wrapped into the payment each month.
The interest rate is typically competitive when you use your VA benefits and there are usually friendlier credit requirements. So, that can be a definite win-win with lower upfront and monthly costs.
Getting Financially Prepared For A VA Loan
When preparing to use your VA benefits to buy a home, you should make sure you have money in the bank for closing costs, home inspections, and the appraisal. It’s ideal to have at least 3% of the purchase price readily available to put toward purchasing a home.
Also, a solid credit score shows your ability to repay debt. If your credit score is high, your interest rate will be lower.
Does 0% Down Payment Mean NO Money Down?
When planning to use your VA benefits to purchase a home that’s not exactly what that means. You will still need to pay closing costs, which are usually between 3-4% of the sales price. You’ll also need due diligence, earnest money and money for any home inspections. Keep in mind though, the due diligence and earnest money are credited back towards the loan.
Timeline For Purchasing With A VA Loan?
Step one in using your VA benefits is to begin the preapproval process and THEN start looking for homes. Once you find the ideal home, we’ll write an offer, and go under contract.
The contract is then immediately sent to the lender for them to begin their process. The lender typically needs 30-45 days to process your VA loan. The time it takes to get the appraisal back needs to also be figured into this timeline.
So, planning to close 4-6 weeks from going under contract is a good place to start.
Which Lender To Use For VA loans
As a home buyer using your VA benefits, you should select a loan officer that is well versed in VA loans and, very importantly, local to the area they are purchasing in. Online lenders attract buyers with low fees, but they can often be slow to respond and hard to get a hold of.
We have several names of good lenders that we’ve already worked with and would be happy to let you know who they are. Veteran home buyers using their VA benefits deserve an agent and lending team that understands your needs and The Old Mill Group is here for you.
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