When you decide to use a VA Loan, you may be excited about the prospect…
Using your VA Loan benefit is something that many service members and Veterans do when purchasing a home. In addition to being a guaranteed loan backed by the Department of Veterans Affairs for the lender, what are the benefits for the home buyer?
Understanding the VA Loan Benefits
The main benefit is that you do not need to have a down payment to buy a home when you use the VA Loan. That means that you can purchase a home and not put any money down. There is no longer a limit on the amount of money you can borrow with a VA Loan if it is your first VA Loan.
The VA Loan does not guarantee that you will be approved. You will still need to provide your own financial information, including pay stubs, credit card statements, and a credit check, to your lender. They will evaluate the approval independent of your VA Loan entitlement. Once approved, you can purchase your home without a down payment.
Keep in mind that you may need to put down a down payment to qualify for the loan amount that you want or need. If you live in a high-cost-of-living area, this is especially true. You can also put down a down payment with a VA Loan without any penalty. This will lower your monthly mortgage payment and result in paying less interest over the life of the loan.
Typically, VA Loans are in 15- or 30-year increments, much like other loan products. There is no penalty for paying off the loan early and you can make extra payments whenever you choose. If you refinance your VA Loan home and want to use a conventional mortgage when you refinance, you will need to have at least 20% equity to use conventional financing. This frees up your VA Loan entitlement if you do want to use it again in the future.